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Artificial Intelligence (AI) is booming, driven by increased computing power, big data, and smarter algorithms. We discuss three ways investors can harness AI.

The AI boom is rapidly transforming industries and creating new opportunities. In fact, even as markets saw turmoil in early 2025, global investment in AI has only accelerated. We have entered a new era in which AI matters for every investor.  The question is: are your strategies evolving fast enough?

How to invest in AI – and with AI

Since 2019, Robeco has integrated next-generation techniques, such as machine learning (ML), natural language processing (NLP) and alternative data signals, into its quant strategies. These innovations have enhanced performance for our quant strategies, contributing positively to excess returns.  

The key is understanding how to harness AI: using it to improve the investment research process and develop innovative alpha strategies on the one hand, and investing in the companies leading this technological wave on the other.  

Supercharge strategies with AI

Data and technology have always driven quant strategies. AI is the latest chapter in that evolution. Techniques like ML and NLP, long studied at Robeco, now operate at unprecedented scale and sophistication. ML uncovers complex, non-linear patterns and enhances signal generation, while NLP interprets nuanced sentiment from textual and audio data, enriching market insights. 

These advances exploit alternative data – the massive, fast-moving streams from sources like credit card transactions and satellite imagery. Incorporating AI into investment processes offers both quant and fundamental investors the advantages of faster speed, broader sources of information and better information processing. But it also necessitates being purposeful, clear-headed and transparent when using AI in our processes.

Deploy AI as an alpha driver

With vast new data and computing power at our fingertips, quant investors today can access sources and techniques that were out of reach a decade ago. Robeco’s quant team, for example, has expanded its toolkit to include everything from sector-specific signals to novel alternative datasets. 

To ensure quant strategies evolve in a robust, evidence-based manner – preserving the reliability our clients expect – we develop dedicated AI-driven strategies within our incubator. This has led to the launch of our Dynamic Theme Machine (DTM) strategy, which combines two of Robeco’s core strengths: thematic and quantitative investing.

Target AI investments

AI has also emerged as a dominant theme in investment portfolios. With its seemingly infinite capacity to take on diverse tasks from computer coding to drug development, AI has been heralded as the next era in technology, akin to the personal computer, the Internet, and the smartphone. While the impacts of such technological shifts are broadly felt, there are typically fewer beneficiaries.

Therefore, we focus on identifying providers of foundational technologies and those adopting the technology within the core of their business to create value.

These opportunities require careful analysis and looking at the substance behind the AI claims. Does the company have proprietary data? AI talent? A defensible strategy to monetise their AI capabilities? By asking these questions, we aim to separate the hype from the reality and potential.

AI washing

Importantly, we treat AI as a means to enhance our investment process, not as a magic wand. There is a lot of ‘AI washing’ out there. It is tempting, after all, to claim AI involvement just to sound cutting-edge. That is why it is crucial that every new technique or signal proves its worth with rigorous backtesting. We do not incorporate an AI-based idea just for the sake of it; indeed, many seemingly promising signals have been tested and discarded because they did not add value beyond our existing models.

Ultimately, AI investing is a long-term endeavour. We are still in the early innings of AI’s impact on the economy. There will be volatility – hype cycles, regulatory twists and competition – but the secular trend is pointing toward more AI, not less. By continuing to use AI to improve investment decisions, developing new, innovative strategies, and investing in AI, we strive to deliver the benefits of this powerful theme to our clients. For investors and AI, the future is bright.

Robeco – One of the quant leaders in the industry with:

• A 25-year track record in systematic investing
• A top 2% ranking in the eVestment peer group¹
• One of the largest quant teams in the industry (50+ researchers)
• A high percentage of funds in our quant equity strategies rated ‘High’ or ‘Above Average’ by Morningstar²

Take our AI course to learn how AI is transforming investment strategies | Robeco Hong Kong

 

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¹Past performance is no guarantee of future results. The value of your investments may fluctuate. In terms of information ratio, 3 of our equity funds in  Global Developed Enhanced Index Strategy, Emerging Markets Enhanced Index Strategies, and Emerging Markets Active strategies are ranked in the top 2% out of all funds in their respective universes since their inception, based on Robeco research using the eVestment database.

For this analysis we extract performance data from the eVestment database, which contains over 16,000 funds. We narrow this down to a more representative sample by applying the following filters: (i) only consider equity strategies, (ii) remove single-country (e.g. Switzerland or India) and single-sector strategies (e.g. health care or REITS strategies), (iii) remove micro-cap stock strategies, (iv) remove strategies with a tracking error below 0.5% (all index strategies, manually verified), and (v) remove strategies with shorter live track records than our strategies. After applying these filters, we have peer groups consisting of 2,132 broad equity strategies for our developed markets enhanced indexing strategy (with data going back to 2004) and 2,812 broad equity strategies for our emerging markets enhanced indexing proposition (data going back to 2007). 

Source: Robeco, Kenneth French data library. Blitz, D., December 2023, “The unique alpha of Robeco Quant Equity strategies”, Robeco article.

²As of December 2024, of the 33 Quantitative Investing (QI) equity funds rated by Morningstar, 91% have a ‘High’ people rating, and the remaining 9% have an ‘Above Average’ rating.

Disclaimer

Important information – capital at risk

This information refers only to general information about Robeco Holding B.V. and/or its related, affiliated and subsidiary companies, (“Robeco”), Robeco’s approach, strategies and capabilities. This a marketing communication intended solely for professional investors, defined as investors qualifying as professional clients, who have requested to be treated as professional clients or who are authorized to receive such information under any applicable laws. Unless otherwise stated, the data and information reported is sourced from Robeco, is, to the best knowledge of Robeco, accurate at the time of publication and comes without any warranties of any kind. Any opinion expressed is solely Robeco’s opinion, it is not a factual statement, and is subject to change, and in no way constitutes investment advice. This document is intended only to provide an overview of Robeco’s approach and strategies. It is not a substitute for a prospectus or any other legal document concerning any specific financial instrument. The data, information, and opinions contained herein do not constitute and, under no circumstances, may be construed as an offer or an invitation or a recommendation to make investments or divestments or a solicitation to buy, sell, or subscribe for financial instruments or as financial, legal, tax, or investment research advice or as an invitation or to make any other use of it. All rights relating to the information in this document are and will remain the property of Robeco. This material may not be copied or used with the public. No part of this document may be reproduced, or published in any form or by any means without Robeco’s prior written permission. Robeco Institutional Asset Management B.V. has a license as manager of UCITS and AIFs of the Netherlands Authority for the Financial Markets in Amsterdam.

Alpha refers to the excess return of an investment relative to a benchmark index and is a measure of performance.

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Issued by Robeco Hong Kong Limited, licensed and regulated by Securities and Futures Commission of Hong Kong. The contents of this document have not been reviewed by the Securities and Futures Commission Hong Kong. Investment involves risks. This information does not constitute an offer to sell, a solicitation of an offer to buy, or a recommendation for any security.

This is a sponsored advertorial from Robeco.