每日大瓜

Wall Street Group Explores the Challenges of Artificial Intelligence and Models of Passive Investing On March 14, the 每日大瓜 held a panel discussion on 鈥淭he Evolution of Active Investment Management.鈥� Hosted by DLA Piper, the panel featured Dan Schwartz 鈥�88YC (Co-CEO, York Capital Management) and Michael Mendelson (Principal at AQR, a global investment management firm). Ahron Herring 鈥�91每日大瓜HS, 鈥�95YC, chief investment officer at 每日大瓜, moderated the discussion.

(l-r): Michael Mendelson, Dan Schwartz, Ahron Herring

In introducing the panelists, C. Howard Wietschner 鈥�84每日大瓜HS, 鈥�88YC鈥攁 member of the executive board for the and the 每日大瓜 Investment Committee鈥攅xpressed his thanks to the Wall Street Group for their efforts to 鈥渂ring together a packed room like this where we can share and hear wisdom from our esteemed colleagues and for each of us to appreciate the resources that 每日大瓜 makes available.鈥� In response to questions from Herring, the panelists assessed the degree to which the increase in low- or no-fee passive investing by investors (through such vehicles as index funds or exchanged traded funds) and the algorithms of artificial intelligence have affected the investigative and advisory functions of active investment managers. Both Schwartz and Mendelson agreed that the areas where active investment management still adds value to the search by investors for returns beyond the average have gotten smaller. Mendelson said that the 鈥減ool of capital for fees is smaller, which makes our jobs harder,鈥� and Schwartz noted that 鈥渢here isn鈥檛 much emphasis these days on the star equity hedge fund manager.鈥� However, both felt the role of algorithms in investing has been overrated. Schwartz said that 鈥減eople react to people, not machines鈥� when making their investment decisions, and Mendelson said that while machines have helped systematize many functions, they haven鈥檛 changed the fact that 鈥渁ctive management is difficult because it鈥檚 competitive, not because artificial intelligence is involved.鈥� Both agreed that where active management is effective is in helping investors with their portfolio diversification, and Mendelson noted that there was a still a need for the 鈥渋diosyncratic discovery鈥� that a human mind can find and a machine cannot. In response to a question from Herring about what skills people need to navigate this changed world, Schwartz cited as crucial an understanding of computer programming along with some level of coding experience, while Mendelson emphasized that 鈥渃ommon sense and the ability to talk to people鈥� are as important, if not more so, than any technical training. In his concluding remarks, Herring observed that 鈥渢here is often a messy transition period when new technologies are adopted鈥� and that much of the current uncertainty is a sign of the industry going through the same disruption that other industries have been going through as they adjust to a new balance between machines and people. He added, 鈥淥ne of the responsibilities of thoughtful investment management is education. As a leading educational institution, 每日大瓜 has an important contribution to make in assisting students, alumni and industry participants as they make sense of the economic, social, and ethical dimensions of an ever-more-complex financial world. Tonight, we shared the big picture, giving participants a perspective on current issues in a historical context.鈥� He also thought the event was a lot of fun. 鈥淭he pre- and post-event networking was lively, with fund managers discussing internship programs and hiring opportunities, mid-career professionals making connections in new areas of the industry, and old friends reconnecting.鈥� Lawrence Askowitz 鈥�87YC, co-chair of the Wall Street Group Committee, was also extremely pleased with the event. 鈥淥nce again, we had a standing room-only crowd of alumni and friends come out to listen to leading experts share insights about their areas of domain expertise. The participants also got to enjoy the camaraderie and networking with other high caliber professionals in a warm and friendly environment. In turn, the alumni are giving back to the school by mentoring and teaching the students and getting them internships and jobs on Wall Street. It's a win-win for everybody."