Kaiju CEO To Speak At Future Proof On The Responsible Use Of AI In Investing

Kaiju CEO Ryan Pannell has been tapped to speak at this year’s Future Proof, a four-day conference bringing together wealth management executives, financial advisors, asset managers, fintechs and other professionals to discuss the latest breakthroughs and growth drivers moving the industry forward. 

Future Proof will take place in Huntington Beach, CA from September 10-13, and Pannell is scheduled to appear on day 3 of the event, speaking on the “Breaking Barriers in Asset Management” panel alongside CEOs of Engine No. 1 and Unlimited Funds. 

Pannell To Speak On AI In Invesng And How To Build Trust In AI-Directed Funds 

As CEO of Kaiju – the firm behind DIP, the market’s first AI-managed ETF – Pannell will likely touch on how the technology is being used in fund management while also addressing some of the understandable skepticism from investors about letting an AI plan their trades. 

With DIP, Kaiju’s first ETF, the fund is directed by an AI trained by the Kaiju team to execute a classic buy-the-dip strategy. Performing over 2 billion discrete examinations per day, it scans the market, accounting for over 25 factors that allow it to not only recognize short-term dips in individual stocks but identify entry and exit signals for the trade. A human fund manager then simply executes the trade as prescribed by the DIP AI.

In a previous interview with Benzinga, Pannell has talked about how their AI works, and how Kaiju has been successfully using it in private funds for years. “We shifted from quantitive trading into AI early on,” Pannell told Bry, adding that the firm faced a lot of skepticism from others in the industry at the time. “It’s the topic du jour today, but you go back to 2018 and it was like we were practicing the dark arts.” 

In another interview with TD Ameritrade, he dove deeper into the skepticism and how Kaiju has focused on transparency when it comes to explaining how the DIP AI works as well as what the current strengths and limitations of the technology are. 

“These systems have substantial guardrails attached,” Pannell said in the TD Ameritrade interview. “We’re not using black box systems, especially in the public sphere. So these things aren’t just going to run off and invest crazily in whatever they want. They’re working within a specific investment ideology framework that we’ve established.” 

For the DIP AI, that framework is the classic buy-the-dip strategy. The quantitive trading strategy is an ideal choice that plays to the strengths of the technology: short-term pattern recognition and data crunching. It can crunch massive volumes of data in fractions of a second and then pretty reliably predict the next movement in a stock’s price from that. 

But Kaiju is also careful not to task the AI with things that it’s not good at. “It’s terrible at context; it doesn’t understand nuance,” Pannell said. “You’ve seen this in iterations of GPT where you have AI echoing and you’ve got answers that don’t make sense, or you have invalid information that’s being disseminated.” Those limitations make this current generation of AI largely ineffective at longer-term market predictions or managing global macro funds. 

For Kaiju, the key to gaining investor trust comes, in part, from this responsible use of AI that takes into account what it can actually do (and what it can’t) – and then being transparent with investors about how the firm is using the technology. 

Ultimately, though, Pannell says that trust will come down to proving that the AI works. “If the strategies are so good under the purview of AI. From end to end, they should perform well. They should outperform.” Judging by DIP’s outperformance over the S&P 500 for the last 90 days, it appears he may be right. 

Featured photo by cottonbro studio on Pexels. 

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