Oh money managers, what you have heard is true; Robots ARE taking your jobs. AND clients. AND your AUM. So, unless you are a ‘coder’ who can write algorithms with your head plugged into an electrical outlet, consider this career changing idea. Concentrate in areas of new inefficient markets that can’t be programmed yet. There are lots of them that humans still have an edge in….for now anyway. So, read up and explore. I would tell you a few, but I’m busy studying.
Rishi Ganti used to help manage the personal fortunes of hedge fund founders David Siegel and John Overdeck, whose quantitatively driven strategies turned them into billionaires. Ganti, 45, says he’s glimpsed the future of his industry. A wave of coders writing self-teaching algorithms has descended on the financial world, and it doesn’t look good for most of the money managers who’ve long been envied for their multimillion-dollar bonuses.
On a cold spring day, Ganti, clad in a gray hoodie, takes quick sips of Earl Grey tea at a bakery in Manhattan’s Tribeca neighborhood and explains that many of his peers don’t yet realize their careers won’t last. “Algorithms are coming for your job—they only ask for electricity,” says Ganti, jabbing his finger on a lime-green laminated table. “Algorithms are already reading, processing, and trading the news even before the photons have hit your retina.” Yet few money managers are alarmed by the threat. “They’re anesthetized,” Ganti says.
He started plotting out the impact of algorithms while working for Siegel and Overdeck at Two Sigma Investments, before striking out two years ago to start his own firm, Orthogon Partners Investment Management Co. To survive, Ganti says, money managers should look beyond the multitrillion-dollar stock exchanges, bond-trading platforms, and big deals backed by private equity and venture capital. To a greater or lesser extent, computers can see all those markets, assess how they’re performing, and start detecting patterns that could reveal profitable trading strategies.
Ganti’s answer is to look for what are known in the industry as esoteric assets—the most obscure stuff he can find. He’s arranged alternative funding for charter schools in the U.S. and paid cash upfront to collect judgments due at Brazil’s supreme court. His team also has purchased nonperforming loans at a discount in Portugal and partnered with local experts in Mexico to fund government infrastructure programs. It’s even provided interim financing for refugee camps in Italy. The point about these investments, he says, is that they require “high human capital” to manage, even if they’re plentiful. “It’s like dark matter,” Ganti says. “They dwarf the visible stuff lit up by markets.”
It’s not unusual to hear hedge fund managers argue that investors need to go off the beaten path to boost returns. What Ganti is saying is that money managers need to go there to save their own careers. He thinks that about 2 percent to 7 percent of the hedge fund industry’s $3 trillion of assets will jump every year from predominantly human oversight to computers…