Kenanga Investors launches its first AI powered fund

By Digital News Asia December 18, 2017

Algorithm which combines AI & computational biology to develop trading strategy
Underlying assets are basket of 25 liquid global indices rebalanced daily

Kenanga Investors launches its first AI powered fund

KENANGA Investors Bhd recently launched its first artificial intelligence fund Kenanga Global Multi Asset Fund. This fund aims to deliver absolute returns in any market condition by diversifying into global index futures with a long/short strategy.

The new fund is the first of its kind in Malaysia, leveraging the breakthroughs in AI to identify profit opportunities from short-term predictive relationships in pricing and volume data. It then constructs portfolios with a focus on capital preservation based on forecasts of instruments’ movements.

“An example of this is Target Fund’s performance in 2016, where it was able to profit from the various opportunities in asset mispricing to deliver a return of 23.2% compared to the S&P 500 benchmark of 12.0%,” explained Kenanga Investors executive directorand chief executive officer Ismitz Matthew De Alwis, quoting from Taaffeite Capital Management LLC.

The fund feeds into the TCM Global Index Fund (Cayman) Ltd, which is managed by Taaffeite Capital Management, LLC.

TCM Global Index Fund, the target fund, is an absolute return fund measured against a benchmark of 15% per annum over 2-3 years, which profits from the daily movement of global equity and fixed income indices. The underlying assets are a long/short basket of 25 liquid global indices rebalanced once a day based on probabilistic forecasts of how indices will move over the next 24 hours.

Taaffeite is a US-based financial services firm that strives to deliver absolute returns that are scalable, uncorrelated with major asset classes and consistent despite market conditions. To achieve this, it combines AI and computational biology to develop a machine learning trading strategy. In 2017, the fund management company received the “Newcomer – Managed Futures (CTA)” title by the 2017 HFM US Hedge Fund Performance Awards in New York.

De Alwis acknowledged that due to the current landscape of today’s financial markets, the new Kenanga Global Multi Asset Fund is a welcome addition to Kenanga Investors’ existing suite of funds.

“The Fund provides investors with not only a wider asset class exposure, but is dynamically managed and has the flexibility to quickly adapt to movements in the market whilst managing downside risks.

“Investments may appreciate or decline with a much greater velocity due to various sentiments. However in an AI model, these sentiments are put aside, and investment decisions are based solely on its unique algorithm which spots opportunities in these asset mispricing. The AI system learns and improves over time to achieve investors’ objectives,” he said.