Kepler Cheuvreux and Unigestion have announced a strategic partnership to establish a joint asset management company specialising in quantitative strategies for public equities.
The collaboration aims to manage over €3bn in assets, marking a significant step for both groups in their ambition to become leaders in the liquid asset management market.
Artificial intelligence (AI) is central to the new alliance.
Alexei Jourovsky, head of equities at Unigestion, told IPE that “probably 70% of our investment management tools is AI”. But he believes the unique proposition for clients is the particular overlay which Unigestion has placed on it.
“We use what we call mind and machine. All the AI tools which are used are supervised by a human being. it’s a little bit like in an airplane. 70% of the flying is done with autopilot. But at the most critical stage of the flight, you have the pilot,” he explained.
Adding the mind to the machine is necessary given the challenges of deploying AI in the investment process.
For example, Jourovsky said pitfalls like “learning on very idiosyncratic time periods and then extrapolating a very specific time period into the future, assuming that it’s going to repeat itself exactly as it was many years ago. If you let an AI process run on past data, you’re going to have the best possible back test. If you don’t stress test your result with future periods of return in a sample, it’s going to [simply] maximize past performance”.
Commenting on which aspects of investment management AI is useful in, Jourovsky said around 50% of its contribution is in calculating Sharpe ratios, and information ratios more broadly. Measuring expected drawdown, volatility, and tracking error is likely another 30%. And the remaining 20% is ESG.
ESG is important to both houses and Jourovsky thinks AI’s role here is crucial.
“ESG compliance, data processing and grabbing the most relevant data within ESG data sets, which are very diverse, and sometimes contradictory […] AI can process all that and help with correcting errors,” he told IPE.
The partnership will be rolled out in two phases. Initially, Unigestion will transfer over €3bn in assets under management in the form of mandates and investment funds, integrating its equities team within Kepler Cheuvreux’s operational infrastructure. The second phase involves creating a new jointly-owned entity alongside the management team, aimed at accelerating business development.
In a joint statement, the chairs of both parties, Laurent Quirin and Bernard Sabrier, stated: “This partnership is driven by a shared ambition: to provide institutional investors with sophisticated, innovative solutions tailored to the evolving market landscape.”
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