All over the world there is a massive shake by the global economic impact of the Covid-19 crisis. This uncertainty has caused volatile markets across the sectors. The areas of asset management firms are under a lot of pressure currently, as they are trying to adapt to this new concept of post pandemic landscapes and the main goal is to demonstrate the investment resilience to their customers. Most of us are expecting this year to better and considerate on us and the stock market as the world is starting to recover from the crisis.
2020 caused a bash in the first-time investors, with research analysis from the Alliance Trust suggested that the 66 per cent of investors between the ages of 18 and 34 invested for the first time. In spite of the financial backlogs the pandemic created for many, the rest were left with extra useable income and spare time on their hands in the lockdown. These new and amateur investors are more prone to the technology and innovation and they sought for the specifics in their portfolio management. Most of the investors however, are expecting better things from the year 2021 to make up for letting down with the results of 2020, as the market fall caused by the pandemic affected the fund managers hard. World stock markets fell to rock bottom during the beginning of the uncertainty of the pandemic and, it gave us an idea of the crash, in the first few months of 2020 only 17 per cent of the U.S. large-cap quant mutual funds out did their records after fees. With the vaccine being distributed in many countries, Governments over the world have launched projects in response to the crisis and have made many policy changes to support and protect the businesses and the individuals from the financial difficulties.
When the vaccine was first announced in the UK last November, the stock market rose by 14 per cent in just a week, and there is hope that other markets will also see the same results as 2021 continues. This has made the economic status of the year 2021 brighter and something for the manager and investors to look forward to as they are willing to invest. Fund managers are faced with the potential retention issue to face the future volatile nature of the assets. The experts are predicting a strong economic rebound, but despite the fact it is not possible to predict the future. Anyway the investors are having high expectations and if those are not met, there could be a massive drop in the business. Traditional risk management methods on the other hand could not handle the massive data and produced erratic predictions about the market views. And investors seek for effective risk management methods to avoid these unexpected losses. To overcome this, using the AI and mitigating the risk with deep learning can go a long way towards a smarter and a profitable decisions while meeting the investor’s expectations. AI-led hedge funds are proving to be the high performers even in the situations like the pandemic, producing massive returns of 34% between May 2017 and May 2020 compared to 12% of the entire Global Hedge fund industry.
Implementing the technologies will most certainly be the best innovative solution to the problems of expectations, mitigated risk and higher returns. Instead of entertaining the repetitive tangible data, it is better to adapt an effective method to produce an alpha data and mitigate the risks.