SINGAPORE (BLOOMBERG) - GIC has hired a big data expert as it expands computer-driven investments through a quantitative group started earlier this year.
The sovereign wealth fund appointed Mr Michael Recce to the newly created role of chief data scientist last month to work in the GIC Data and Analytics Department, according to a spokesman. Mr Recce, a former associate professor at the New Jersey Institute of Technology, is based in Singapore and is focusing on collecting publicly available data and analysing them for patterns.
While the state fund has been using quantitative investment strategies for some years, it combined those activities in the Systematic Investment Group started earlier this year, headed by former Goldman Sachs Group executive director Percy Wong, the spokesman said.
The expansion into investments using algorithms is part of a global shift as investors bet machines, devoid of emotion, are better placed to make money or protect their capital in volatile markets. GIC is seeking extra returns in new areas as it warned in July that "most asset classes are inflicted with a high valuation problem" which will weigh on investment returns in the coming decade.
As the global hedge fund industry is seeking new ideas to boost performance amid lacklustre returns, many firms are realising that computer models aren't infallible. For instance, a start-up backed by hedge fund manager Kyle Bass was unable to correctly predict that Mr Donald Trump would win the US presidential election, even though it was able to call Britain's Brexit vote accurately in June.
GIC's Systematic Investment Group will invest across assets, and will use its quantitative models to pick individual securities and identify macroeconomic themes, according to the spokesman. The unit currently has more than 10 employees and will expand further, she said.
Other big investors that have expanded capabilities in this area include London quant firm Winton Capital Management, which said in April it was starting a data science centre in San Francisco and planned to hire some 40 scientists. The US$26 billion (S$37 billion) Citadel in October promoted its former chief risk officer Alex Lurye into a new role of chief data officer. This month, Third Point founder Dan Loeb told investors that hedge funds needed to use data sets and quantitative techniques to remain competitive.
Before joining GIC, Mr Recce worked at a data research firm called Quantcast Corp and as chief scientist at Fortent Inc, an IT firm providing anti-money laundering and fraud detection technologies to banks and insurance firms, according to his LinkedIn.com profile.
GIC, founded in 1981, manages "well over" US$100 billion. The London-based Sovereign Wealth Center puts its total holdings at US$354 billion, making it the world's sixth-biggest state fund.