How To Optimize Investment Decisions With Artificial Intelligence


During our latest live event, we explored how MDOTM's AI platform, Sphere, empowers institutional investors to streamline and enhance their investment strategies.

Through five key sections, in this article we summarize the event's key takeaways and we reveal how Sphere enables investment professionals to set custom portfolio constraints, enhance risk management with risk constraints, define precise portfolio strategies with portfolio targets, seamlessly integrate their market views with Sphere's AI, and leverage generative AI for enhanced explainability.

This article sheds light on how Sphere serves as a game-changing tool for investment managers, simplifying complex processes, advancing risk management, and providing invaluable insights, essential for success in today's dynamic financial markets.


Setting Custom Portfolio Constraints

In the world of investments, precision and customisation are paramount. That's why Sphere, MDOTM's AI platform for institutional investors, empowers you to set custom portfolio constraints effortlessly. Whether you have a specific universe in mind or prefer to choose from our wide range of MDOTM universes, Sphere gives you the tools to craft portfolios tailored to your exact specifications.

If you have a particular universe of assets in mind, Sphere allows you to upload your custom universe with ease. This feature, found within the “Universes” section of Portfolio Studio, provides the flexibility you need to fine-tune your investment strategy. However, if you're looking for comprehensive coverage across various asset classes, including indices, funds, ETFs, and single stocks, MDOTM's predefined universes are readily available for your consideration.

Once you've chosen your investable universe, the next step is defining your portfolio's target and objectives. This is where Sphere's AI-driven capabilities truly shine. With your input, Sphere enhances your  portfolio so it aligns perfectly with your objectives. Whether you seek to maximise returns, minimise risk, or achieve a specific balance of both, Sphere adapts to your preferences.

In the world of portfolio optimisation, constraints serve as the guardrails to help you stay on the right track. These constraints are the hard and soft limits that Sphere adheres to when constructing your portfolio. You have the flexibility to set constraints for various parameters, including asset allocation, sector exposure, or any other requirements relevant to your investment strategy.

In the Portfolio Constraints section, you can effortlessly add and tailor constraints to suit your specific needs. Whether you want to define the minimum or maximum weight of a single instrument, impose restrictions on certain asset classes, or specify particular sectors for your portfolio, Sphere allows you to do so seamlessly.

Sphere's intuitive interface permits you to adjust and validate your preferred constraints. You can even transform constraints into soft constraints, providing a degree of flexibility while adhering to your investment guidelines. Adjusting the order of constraints is as simple as dragging and dropping, determining their priority in finding an optimal solution for your portfolio.

With Sphere, the heavy lifting is handled by AI, while you retain control over your portfolio's constraints and objectives. The result is a portfolio that precisely aligns with your unique investment strategy and is tailored for success in the ever-evolving financial landscape. In the subsequent sections, we will explore how Sphere enhances risk management, defines portfolio strategies, and seamlessly integrates AI insights into your market views, ultimately making portfolio optimisation a straightforward and efficient process for institutional investors.

Enhancing Risk Management With Risk Constraints

Managing risk in investments is extremely crucial. To address this critical aspect of portfolio management, Sphere, MDOTM's AI-driven platform for institutional investors, offers an intuitive solution for establishing risk constraints. With the ability to finely tune these risk parameters, investment professionals can significantly enhance their risk management strategies.

Sphere makes the process of risk management straightforward and effective. In the portfolio construction journey, risk constraints play a pivotal role in managing and controlling the level of risk in your investments

Within Sphere's interface, you'll find the option to establish risk constraints effortlessly. This step provides you with the means to guide Sphere in constructing a portfolio that aligns precisely with your risk tolerance. Sphere allows you to set constraints for risk measures such as Value-at-Risk (VaR).

With Sphere, customising risk constraints to suit your risk management approach is a seamless process. You can fine-tune risk thresholds and measures to align with your investment objectives. Whether you seek to minimise risk, strike a balance between risk and return, or have specific risk criteria in mind, Sphere adapts to your preferences.

Sphere's AI-driven risk management capabilities are designed to provide institutional investors with the utmost precision and control over risk. By incorporating risk constraints into your portfolio strategy, you can effectively navigate the complexities of the financial landscape while maintaining confidence in your risk management approach.

In the subsequent sections, we will delve further into how Sphere enables you to define your portfolio strategy and seamlessly integrates AI insights into your market views. This holistic approach to portfolio optimisation ensures that risk management remains at the forefront of your investment strategy, safeguarding your investments in a dynamic and ever-evolving market.

Defining Your Strategy With Portfolio Targets

Aligning your portfolio strategy with predetermined targets is essential for investment goals. Sphere, MDOTM's AI-driven platform, simplifies this crucial aspect of portfolio management, enabling investment professionals to seamlessly define their portfolio targets.

Sphere empowers you to take control of your investment strategy by offering an intuitive means to define and set your portfolio targets. In this strategic phase, you can specify your desired objectives or allocations for various assets, sectors, or other investment categories within your portfolio. 

Within Sphere's interface, you'll find a dedicated step for configuring your portfolio targets. This feature allows you to outline your objectives clearly, providing the guidance Sphere needs to construct your ideal portfolio. Whether you seek to target specific asset classes, sectors, or other investment categories, Sphere will strive to meet these targets with precision.

Sphere's AI-driven approach to portfolio construction is designed to facilitate the attainment of your portfolio targets. By considering your specific objectives and allocations, Sphere employs its analytical capabilities to generate a portfolio that aligns with your investment strategy. However, it's important to note that, at times, meeting these targets may conflict with other constraints, and Sphere will prioritise adherence to constraints over achieving targets when conflicts arise.

Sphere's emphasis on portfolio targets ensures that institutional investors have the flexibility to tailor their investment strategy according to their unique goals and requirements. By effectively defining your portfolio targets, you take charge of your investment journey and create a portfolio that aligns seamlessly with your objectives.

In the subsequent section, we will explore how Sphere seamlessly blends AI insights with your market views, further enhancing the process of portfolio optimisation. By fusing your market perspectives with AI's analytical power, Sphere offers a comprehensive approach to institutional portfolio management, providing the tools needed to thrive in the dynamic and ever-evolving financial landscape.

Combining AI’s Insights With Your Market View

Successful investment management requires the integration of analytical AI insights with an investment professional's market view and expertise. This blend of AI analysis and human intuition empowers institutional investors to make well-informed decisions. Sphere offers a seamless means to combine your market views with AI's market view, enhancing the portfolio optimisation process.

Investment professionals rely on their in-depth knowledge and market insights to anticipate future developments. Simultaneously, Sphere offers valuable market forecasts based on rigorous AI analysis. Merging these perspectives can provide a comprehensive approach to portfolio management.

Sphere simplifies the process of aligning your market views with AI-generated insights. By doing so, you can leverage both your expertise and AI's analytical capabilities to optimise your portfolio. 

Within Sphere's intuitive interface, you'll find a dedicated section for providing your market view. This feature allows you to express your expectations regarding the future performance of specific asset classes, sectors, or markets. Your market view serves as a crucial element in tailoring your portfolio strategy.

In addition to your insights, Sphere offers its forecasted market view as a starting point. This AI-generated market forecast provides an AI perspective on expected market performance across different scenarios, including varying levels of risk. Investment professionals can customise and fine-tune this view based on their expertise.

By integrating your market views with AI insights, Sphere empowers you to make strategic investment decisions. Expected returns and volatility are calculated based on the regime forecast probabilities, and you can further personalise these parameters to align with your specific market outlook. The result is a well-balanced portfolio that leverages both the precision of AI analysis and the nuanced perspective of human expertise.

The fusion of AI insights with your market views provides a competitive edge in the ever-evolving investment landscape. By seamlessly integrating these elements, Sphere supports investment professionals to construct portfolios that align with their goals and market expectations.

Generative AI To Enhance Explainability in Investments

While Sphere empowers institutional investors to effortlessly optimise their portfolios, it goes a step further by offering the innovative Ask Sphere AI feature. This ChatGPT-powered copilot, seamlessly integrated within Sphere, enhances the platform's explainability, providing a unique and unparalleled experience for investment professionals.

Ask Sphere AI takes on the crucial role of analysing the vast proprietary data generated and computed by Sphere regarding users' portfolios. By tapping into this wealth of data, Ask Sphere AI transforms the way users engage with their portfolio information. This integration redefines investment explainability within the platform.

With Ask Sphere AI at their disposal, clients can delve deeper into their portfolios, seeking real-time insights and answers to their queries. The fusion of ChatGPT's natural language processing capabilities with Sphere's data-driven insights offers a user-friendly and intuitive means for investment managers to interact with their portfolios.

The collaboration between advanced AI technologies and data analytics underscores Sphere's commitment to enhancing AI explainability. Investment managers have the ability to seek immediate answers to their questions, enabling more informed decision-making. As the investment landscape continues to evolve, this cutting-edge integration ensures investment professionals navigate dynamic and competitive financial markets with greater precision and confidence.

AI-driven technologies have undeniably redefined portfolio management. By simplifying complex processes, enhancing risk management, and providing invaluable insights, platforms like Sphere have become essential for modern asset management. With Sphere, investment professionals not only optimise their portfolios with ease but also gain new levels of customisability, advanced analytics, and enhanced explainability. It's a testament to how Sphere has consistently delivered innovative solutions to empower institutional investors to navigate increasing market complexity.

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