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Money Management

CIO of Japan’s GPIF praises AI technology

Fear of adoption has prevented broad adoption

Hiromichi Mizuno, chief investment officer of Japan’s Government Pension Investment Fund

Artificial intelligence can be a boon for the world of institutional investing but the industry has been too slow in adopting the technology, said Hiromichi Mizuno, executive managing director and chief investment officer of Japan's 150.6 trillion ($1.34 trillion) Government Pension Investment Fund.

"This is the type of industry particularly suitable to benefit from artificial intelligence because it's an intelligence-heavy industry," Mr. Mizuno said. The industry has been "too slow" in adopting AI "because it's probably too disruptive" to existing business models, he said.

Mr. Mizuno made the comments Monday at the Council of Institutional Investors spring conference in Washington.

In November 2017, GPIF partnered with Sony Computer Science Laboratories to study the impacts of AI on asset management. The initiative allows GPIF to explore possibilities on how to utilize AI technologies for the long-term asset management of the pension fund.

Mr. Mizuno said GPIF is attempting to show institutional investors how AI technology can be harnessed effectively. "We're just trying to prove, even the boring organizations like the GPIF can benefit from AI to send a message (that) the industry should be able to benefit much more from AI adaption," he said.

A 2017 GPIF news release said the scope of the research project includes "analysis of AI's impact on asset managers' business models and appropriate manager evaluation methodologies," as well as potential uses of AI technologies to promote long-term investing, "including AI-driven dynamic factor analysis and scenario-based risk management."

Through the partnership, GPIF can track the trading patterns of its asset managers and reach out if it detects a change. Mr. Mizuno said the technology has already noticed some strategic drifts from asset managers and has led to discussions. It "has been very successful," he added.