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A new Danish hedge fund has received quite a large amount of attention in the last month or so. They are launching a new investment fund that uses proprietary AI to select stocks to invest in. They claim to on the forefront of this. However, looking a bit on what research exists, it seems as if it is not as cutting-edge as they try to make it to be. I'm not an expert though which is why I would like to hear other's opinions.

Press release about the fund

Interview

Any ideas of similar funds already existing? They seem pretty confident in their solution so any ideas of what it is they are doing (different)?

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Most of us could rattle off dozens of such funds. AI is a broadly used term. Stylistically, I would be wary of an approach that states "There are no systems that are completely bad or completely good. If you have such a system that hits wrong every time, you just turn it around," he says. Suggests that the trades are not grounded in a hypothesis. – Quant Guy Jul 18 '12 at 11:48
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They are most definitely NOT on the forefront of this. Remember, a big part of a hedge fund's success is marketing. Without marketing to raise money you have no fund. Catchy buzz words and heavily spun articles about the genius behind the system make it easier to raise. See previous stores on the "Twitter" hedge fund, etc. – Louis Marascio Jul 18 '12 at 12:54
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So it is as I suspected - marketing - and most of the Danish IT and business media fell for it :) – Mark Gray Jul 18 '12 at 13:28

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Such an article, if written in English, would get laughed at so hard by the blogosphere the authors would be shamed into doing a bit more research on Wikipedia next time before claiming a fully automated AI system is "the first of its kind."

This guy's main competitive advantage is in pitching to non-English speaking Danes who don't have a clue what's really going on out there. Why do you think he refused to moved to London? He knew he couldn't make it in a globally competitive landscape. He may raise some money in the short term, but it looks highly unlikely he will be successful at investing in the US stock markets.

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It seems as if he has conviced at least some Danish pension funds and that that has been the focus so far. However, they also plan to take it international. I'm not sure if I'm betting on stupidity or malice yet though :) – Mark Gray Jul 18 '12 at 14:27
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Another common marketing gimmick is to tell your rubes that you will soon have "international" clients, and they will be the first among an elite bunch. He may not be malicious, though, as he may honestly believe that he has a good system, and simultaneously believe that he is not smart/credentialed/educated/experienced enough to make it in London. – Tal Fishman Jul 18 '12 at 14:32
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It is a first in Denmark, using AI in portfolio optimization. Even if it has single-handedly been developed by this guy in Delphi over the last 10 years. I'm not sure if it tells you more about that hedge fund or Danish hedge funds in general. – Mark Gray Jul 18 '12 at 14:38

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