The combination of factor investing and new technology is dramatically changing active management, according to a new report from State Street Global Advisors. “We expect the advent of new data, tools and technology will give rise to a new species of active managers, increasingly looking at investment opportunities and risks through a factor lens,” says SSGA's Fall IQ report, titled “The New Active.”

As originally reported in GlobeSt.com's sister publication, ALM's Think Advisor, SSGA believes these three trends will have a big effect on active managers today and in the future.

1. Factor Investing

“Factor investing is disrupting traditional active management and raising the bar on managers to show how much of their return is true, skill-based alpha,” the report states.

It predicts that the factor-based process of natural selection will likely weed out many traditional active managers as well as some high-priced hedge fund managers.

2. Data

The volumes of new data continue to “boggle the mind,” according to the Rick Lacaille, chief investment officer at SSGA.

Every minute, 7.8 million videos are viewed, more than 3.3 million searches are entered, 151 million e-mail messages are sent and more than 436,000 tweets are posted, according to Internet Live Stats (cited by World Wide Web Consortium) as of September 2016.

3. Artificial Intelligence

AI is driving millions of dollars of investment in startups and research into a range of possible applications from strengthening internet search engines to building self-driving cars, according to the report.

What does this mean for the industry? Check out the full article to learn more on the subject.

Instant Insights /

What Are Three Trends Transforming Active Management?

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