After more than two decades at Morgan Stanley, Shyam Sreenivasan understood risk and investment technology better than almost anyone. In the summer of 2018, he used that knowledge to build Quantel AI, an artificial intelligence-powered startup.
This week, Unifimoney has given users access to Quantel’s TenjinAi, a new breed of robo-advisor, that uses their AI algorithms to comb through the market and deliver returns higher than traditional manual asset allocation methods. Unifimoney users can choose between the Basic and Advanced options and adjust the robo-advisor’s risk level to match your investing goals.
For this week’s Braintrust, we spoke with Quantel’s CEO Shyam Sreenivasan and Quantel’s Chief Data Officer Sudeep Amin to learn more about what they’ve built and how it can change the way average investors grow wealth.
So, I founded this company back in the summer of 2018 when I was looking at the spectrum of the adoption of technology, both by enterprises and people, and there were a few areas where the cutting edge of AI could be used better to serve both enterprises as well as people.
What we focused on is: can we use AI to better manage the risk that individuals face with respect to their uncertainty of investments? And how can we use our AI to predict with better accuracy market performance?
With our product Tenjin, we use artificial intelligence to sort through the data that's available in the financial world: both market data and alternative data such as sentiments. Our goal is to allow AI and that data to actually benefit a normal investor, not just a highly sophisticated or high net worth individual. It's not about helping a billionaire make more money. The question is: can an average person actually have better returns that can change their financial lives?
This is all about applying the advancements of artificial intelligence to see we can actually benefit for a common man
Exactly. It’s the heart and soul of what we're doing: democratizing the principles of data and AI in investing.
When you typically invest in a stock, you look at historical performance of a stock and you decide whether it's a good stock to buy. But it isn't not about the past, it's more about the future. That's what we are putting to our AI: can we give the average investor the opportunity to invest based on the same dataset being used by hedge funds?
If you can return 15% consistently, your net worth multiplies within even five-years’ time, right? That's the power of compounding. Now, some hedge funds do an even higher percentage, because their investors can take a lot more risk. For us, it's important to create a product that fits the amount of risk-taking ability of an average investor. We can cater to different risk appetite of investors: some investors nearing retirement will be very conservative, and some millennial investors will be very aggressive. So, we offer our investment solutions to the spectrum of the different risk takers.
The robo-advisors that you see now are basically applying classical asset-allocation methodology to investing. They take a bunch of classes of assets and just spread your money across those classes. The idea is: if the markets go down, your money is diversified enough that you would not have a significant amount of drop. But that also means that when the markets are rising, your growth is also muted because you're spread so thin across these different asset classes and different ETFs.
If you take that spectrum of investments that they offer, your portfolio will be spread really thin. What we are doing is a much more intelligent and more active investing where we are trying to scour the market for opportunities. Rather than relying on past performance only, like many services, we use our AI to try to look at the different market factors and predict where the market is going. Rather than spreading thin, we're trying to invest in opportunities that have the best potential for growth. That lets you have the opportunity to rise along with the market in a much more accelerated way. And when the markets do go down, because we're actively managing, we can also manage the amount of downturn that you experience.
So, the algorithm is looking at various different data inputs — both historical market performance and the fundamental performance such as revenue, cash flow, etc. We also look at how the market has behaved with the crowd sentiments as one of the inputs, what the analysts sentiments are, who's recommending what. And then we consider how these different inputs played to the actual performance of the stock in the past.
We study each and every stock’s behavior with respect to these inputs. And then we look at how the stock is expected to do in the near future, which we define as three months ahead. And we don't look one year ahead or five years ahead, AI struggles to identify one-year or five-year horizons but it’s very good at predicting short-term performance. So, we are basically using AI to understand how these companies have performed in the past and, based on that intelligence, we are ranking the universe of various high-quality investable securities. Once that ranking is done by our engine, we use our algorithm to pick and choose from among that list of securities to create different themes and different kinds of investment portfolios.
One of the biggest issues in investing is the emotions aspect. So, when emotions come into play, we typically end up making the wrong decisions, because you're either doing investments based on greed or based on fear. One of the good things about an AI-driven strategy is you're taking that emotions out of play. It's a very data-driven approach to investing, which also means that you're able to take decisions in a much more timely manner. And that's the key for allowing constant iteration.
We also try to simplify the selection process by having the artificial intelligence do all of the hard work at the frontend. It's like refining gold — you take out all the impurities, you take out all the noise and what is left is just the pure gold. That's what our investing engines will basically do — identify the best of the best. And that's what we try to invest in.
I have a son who is just 22 years old and one thing I advise him is to start your investing early. Start smart and start early. Albert Einstein supposedly said: the best invention ever is the power of compounding interest. If you combine that with a disciplined investment approach, like the one we are offering, your wealth can start to really grow. Take the emotions and the fear out. Make investments driven by systematic strategies.
My sincere, most important piece of advice is: start smart and intelligent and disciplined.
My second piece of advice is to find a platform like ours that helps you achieve those principles with very little investment and effort.
We are now slowly rolling out our beta program. Be one of the first to get access by signing up today.
The above does NOT constitute an offer, solicitation of an offer, nor advice to buy or sell specific securities. The opinions listed above are not the opinions of Unifimoney Inc. or Unifimoney RIA, Inc. but represent the opinions of independent contributors. These contributors may or may not hold positions in the stocks discussed. Investors should always independently research any stocks listed and form their own opinions, while recognizing that any investments made may lose value, are not bank guaranteed and are not FDIC insured.