Artificial Intelligence (AI) has the potential to transform the investment cycle – from identifying trends and insights to developing faster and smarter tools, according to MSCI.
On Monday, June 10, MSCI, a provider of mission-critical decision support tools and services for the global investment community, launched MSCI AI Portfolio Insights.
“Given our deep expertise in modeling and advanced analytics, AI is not new to us,” a spokesperson from MSCI told Traders Magazine.
“The development of AI Portfolio Insights represents just one way in which MSCI is exploring turning raw data into actionable, AI-powered investment insights for clients,” a spokesperson said.
MSCI AI Portfolio Insights is designed to help investors better identify and manage potential emerging risks that dynamic markets pose to their portfolios.
MSCI has combined its extensive risk and performance modelling capabilities with generative artificial intelligence (GenAI) to enhance risk reporting.
MSCI AI Portfolio Insights merges generated text with modern dashboards and cloud-based technology to enhance communication and efficiency in risk and portfolio management.
These tools aim to empower risk management teams at asset managers, hedge funds and asset owners to drive collaboration across their firm’s investment teams.
MSCI AI Portfolio insights is designed with strong protections and measures to safeguard client intellectual property, MSCI said.
“MSCI does not train the LLM on client data. Each client’s data is segmented into a separate cloud domain to prevent any leakage of information.”
MSCI AI Portfolio Insights leverages proprietary algorithms to curate large volumes of data, aiming to surface the most important factors impacting risk and performance and connecting them as appropriate to market events.
According to a spokesperson, the three core functions of MSCI AI Portfolio Insights – data curation, summarization, and the interactive agent – undergo continuous model validation and ongoing quality improvement.
“We evaluate the data curation algorithm using a set of quality metrics that correlate with interesting and engaging content, such as the proportion of events with associated news, comparison against human-labeled datasets, and measures of repetitiousness such as autocorrelation of scores.”
Human testers read sample summaries and score them for groundedness (lack of falsehoods), coherence (no conflicting statements), relevance (accuracy regarding what happened and why) and fluency (natural text).
“We measure the performance MSCI AI Portfolio Insights against a battery of validation questions that encompass a range of tasks, from basic data fetching to complex analyses generalized from interactions with testers.”
The model validation framework includes automatic evaluation of samples with humans in the loop to align the results with client expectations.
MSCI AI Portfolio Insights also features an AI agent to help risk managers further understand and decompose the risk and performance drivers.
Based on natural language interaction, the assistant can answer complex questions about portfolios.
MSCI has also introduced the Macro Finance Analyzer, leveraging MSCI’s financial modeling and stress-testing capabilities.
This tool is designed to test how changes to macroeconomic conditions could affect a portfolio’s risks and returns across asset classes, supporting investors’ asset allocation decisions.
Users can explore and test a wide variety of conditions, with the ability to adjust expectations for rapidly evolving market events and trends – like potential impacts of interest rate changes or changes in long-term economic growth.
MSCI’s portfolio analytics tools are available on MSCI ONE, a cloud-based technology platform that combines flexible distribution, cloud delivery, dashboards, and visualizations.
Launched in 2022, the platform enables users to seamlessly navigate MSCI’s robust analytics to help them identify key insights, innovate rapidly, and build investment portfolios that seek to deliver better strategic outcomes.
MSCI has been using AI and natural-language processing for a decade to enhance their content and methodology, according to a spokesperson.
“There are currently many AI projects at MSCI at various stages of maturity and complexity, which aim to provide data at scale to maintain our competitive advantage while boosting the capabilities of our solutions to clients,” a spokesperson said.
“MSCI aims to leverage AI to transform the client experience and develop new products that enable the institutional investment community to create differentiated investment solutions.”
