An Australian based start up is taking on the multi billion dollar a year funds management industry and is using artificial intelligence, machine learning and big data to stay ahead of the ASX.
Plexus Analytics, based in the FinTech hub, Stone and Chalk, is attempting to use technology to replace the traditional fund manager. Early next year it will launch Australia’s first pure machine learning ASX equities fund (circa $10m).
Plexus uses AI and unique big data sets to get ahead of the curve and adapt its cutting edge technology to pick the best stocks on the ASX. Three years in development, the technology has been back tested across all equity market sectors for the past 14 years, including boom and bust cycles in Australia, Europe and across Asia. Plexus is working with PhD data scientists at leading Australian universities to develop algorithms that are constantly adapting to market trends.
Respected fund manager Chris Robertson, a former Investment Director of Colonial First State Global Asset Management, is leading the business. He says the existing funds management industry is ripe for disruption.
“The implications for the fund management industry are significant,” Mr Robertson said.
“Our mantra is better results for investors in the form of more consistent long term investment outcomes and lower fees. The technology we have developed has the ability to deliver our goals without the need for excessive fund management overhead.
“The use of machine learning algorithms for equity investing is increasing globally. The arrival of cloud computing, open source modelling software and developments in database technology have allowed emerging FinTech companies like Plexus to develop its own proprietary machine-learning technology.
“Investors, for too long, have been receiving mixed performance outcomes in portfolios for high fees. Every year we see reports that active managers have under performed their benchmarks – and that has to change.
Mr Robertson said once investors have seen the benefits that predictive analytics can bring to their investment approach, funds under management will begin to flow.
Broad application of the strategy:
Global equities
Australian equities
Enhanced passive
Market Neutral
“We envisage both institutional and retail investors in Australia will be interested in Plexus. We have also started receiving interest from international institutional investors,” he said.
“Our testing of the investment models show a positive return on average of over 10 per cent per annum over the cash rate over the past 13 years. We aim to have portfolio volatility of around 5-8 per cent per annum and we are consistently achieving over a 75 per cent success rate on our underlying investments.”
Mr Robertson said we are targeting to officially launch a fund in Q1 2017.
About Plexus Analytics:
Plexus Analytics is an emerging FinTech company focused on delivering superior risk adjusted investment returns with radically lower management fees for the funds management industry. We were founded on the premise that there is hidden value in proprietary data sets or ‘big data’ in financial markets as proven by the wide spread application of big data across other industries and new business models. Since our founding, we have developed unique intellectual property using our proprietary algorithmic technology and data sets to produce our institutional grade scientific portfolios. Our scientific portfolios are driven by modern algorithmic technology, computer science and quantitative finance.
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