SANLAM ARTIFICIAL INTELLIGENCE: Fund uses AI… to find the best in the world of AI
Fund manager Chris Ford admits there may come a day when the fund he has set up and managed will be obsolete, but not for at least 20 or 30 years.
When Ford and co-manager Tim Day launched Sanlam Artificial Intelligence in 2017, it was the only fund focused solely on AI. At that time, most of us were just starting to see the impact in our lives of AI, which uses machine learning to simulate human intelligence.
Fast forward to today and the growing presence of AI in our daily lives is visible everywhere from healthcare to online shopping. “Everyone who watches Netflix or buys a vacation online has been affected,” Ford says. Fast forward another 25 years and Ford expects AI to have invaded every corner of our lives. “At that point, the fund could look like any other global equity fund because AI has been adopted by all companies around the world,” he says. ‘However, the question is how that process works out and which companies have the competitive advantage.’
In his quest for these winners, Ford looks for companies that push the use of AI to the extreme – what he calls his quest for “the pointy end of the spear.”
To this end, he invests in a portfolio of 35 to 40 companies around the world. Some are household names such as Microsoft and Google’s parent company, Alphabet.
Others are less well-known, such as Japanese robotics company Fanuc and American data storage company Western Digital.
So far, the strategy has paid off. In the four years since its launch, Sanlam Artificial Intelligence has seen annual growth of 34, 13, 38 and 31 percent respectively. Ford says it is more proud of the consistency it has offered investors than the returns the fund has generated.
He believes some of the most exciting applications of AI are in healthcare. “One of the most exciting developments last year came from the AlphaFold AI system, which was developed by Alphabet’s DeepMind,” he says. ‘AlphaFold is trying to understand how proteins fold in the body. This will help us understand how diseases arise and form in the body, which in turn will inform us about how to treat or prevent them.”
If this were done by people in labs with pipettes, it would take years, Ford explains. But by using AI and machine learning, thousands of proteins can be analyzed at once, speeding up the process.
The fund not only looks at the companies that develop AI tools, but also those that show willingness and innovation in the way they adopt existing tools. Ford believes that good use of AI is a strong indicator of a company that is likely to succeed. “A company that wants to put AI to good use usually requires an open-minded management team, a willingness to innovate and a vision.”
UnitedHealth, based in Minnesota, is a prime example. Ford says the healthcare company carefully manages its data to reduce bureaucracy, refine adoption and improve health outcomes for customers. As a result, it is already worth $400 billion and growing its market share. US lending company Upstart, which uses algorithms to measure creditworthiness, is another. Unsurprisingly, Ford and Day themselves are using AI to manage the fund. They use an AI program to identify all the companies in a given sector and select the companies that are most likely to succeed.
For example, when they decided to invest in quantum computing, they used AI to search for information about any company in this area, around the world, and in any language.
They then locate the companies with strong balance sheets. Sanlam Artificial Intelligence Fund has an annual fee of 0.52 percent and the scholarship ID code is BYPF331.