In collaboration with the Research Institute of the Finnish Economy, The Conference of Great Lakes and St. Lawrence Governors and Premiers, and the Global CleanTech Cluster Association, FinHub is focusing on fund design principles for industrial renewal.
Industrial renewal refers to the emergence of new or adapted industries or industry clusters, usually by integration of knowledge sectors and IT, or broadly as the result of technological advances. The challenge is how to organize and allocate investment assets from emerging industry clusters, given that they combine:
Big data-driven textual data mining, in combination with financial information tied to liquidity, profitability and efficiency, enable asset allocation strategies with risk and return profiles that are attractive to institutional investors such as pension funds and family offices.
Why is investment fund design a topic of academic research endeavor?
Industrial renewal is an expensive and long term value proposition, because it requires industry value chains to realign, expand and integrate as the result of technological innovation, such as IoT and big data analytics. This is where FinTech fits in: IT and AI efficiencies in finance result in the disintermediation of transactions. Algorithms are increasingly taking the place of humans, particularly as the result of deep learning and trend analytics offered by Watson, among others.
The research challenge is to develop the algorithms and uncover the trends, correlations, and investment opportunities in the area of asset risk aggregation and mitigation. Operational algorithmic fund (alg funds) designs capture years of data research.
Our work has focused on the development of a new type of investment vehicle: the Multi-Asset Renewal Fund.
The fund integrates know-how from:
The risk and return profile shows that this type of fund combines the returns of stocks or listed private equity with the risk (s) of high yield bonds.
Patrick Bradley, MSc, Erb Institute and Ross School of Business; Sven Adriaens, BBA, Finance, Michigan State University; Students from CEE/ChE 686 (class of 2016).
Antti Tahvanainen, PhD, Research Institute of the Finnish Economy, Helsinki, Finland; Chris Haeuselmann, Global CleanTech Cluster Association; Conference of Great lakes and St. Lawrence Governors and Premiers; Michigan Office of the Great Lakes
Mark Diaz, Managing Director, NatureVest at The Nature Conservancy; Sylvain Reynes, President, Credit Spectrum (NY); Jonas Englund (SEV Bank, NY), and many others