Increment Capital Deepens AI Research to Enhance and Amplify Quantitative and Fundamental Investment Capabilities

HONG KONG, March 31, 2023 /PRNewswire/ — Artificial Intelligence (AI) has become an extremely hot topic, especially after the introduction of ChatGPT, an application that reached over 1 million users in just 5 days. Although AI has garnered significant media attention, investment in this field is still in its early stages.  Foundational large language models (LLM) like the one ChatGPT is based on will continue to advance at accelerating rates. The explosion of new applications and the reimagining of existing ones on top of LLMs like ChatGPT is a thrilling prospect. In the long run, almost every existing application has the potential to be reimagined in this area, making it an exciting time for AI innovation. The experimentation with LLMs in new application areas such as finance, art, design, software development, and content creation is happening at an exponential pace. Those who incorporate these powerful tools into their workflows will benefit from increased productivity. This is particularly true for the financial industry.

Increment Capital is a technology-driven investment manager that fuses data science, AI and machine learning (ML) methods with a fundamental, research-intensive approach to investing in Asia. According to Increment Capital, the next significant impact of AI on finance will occur at the intersection of quantitative and fundamental investing. By combining fundamental investing principles with AI, traditional research-driven investors can accelerate data discovery, analysis, information synthesis, and insight extraction.

The investment industry will increasingly adopt AI-based tools to improve productivity and performance over time.  As an investment manager that draws talent and experience from both fundamental and quantitative fields, we have found machine learning driven quantitative methods highly effective at making investment decisions for opportunities with ultra-short to short time horizons while traditional, fundamental investing principles remain suited for medium to long-term investments which require a much deeper understanding of company specific drivers, competitive dynamics, industry trends, regulatory and technology changes.  While AI tools hold significant promise in large-scale enhancement and automation, investment decisions based on well-informed and researched holistic investment theses remain exclusively in the realm of human decision-making. 

Increment Capital has been exploring the potential use cases of generative AI applications built on top of LLMs, such as ChatGPT. In the long run, ChatGPT and similar applications will likely move towards integrating areas that were traditionally in the realm of human decision-making. In the near term, ChatGPT’s initial use case is automating many processes involved in the investment decision-making process. For example, it can automate the analysis and synthesis of large amounts of data instantaneously, accelerating the identification of insights, patterns and predictions that can help inform human decision makers and research strategists.  From an IT infrastructure perspective, AI tools democratize access to best-in-class data, enabling firms to coherently synthesize and collect data in real-time across thousands of sources without huge custom pipelines and engineering teams. Increment Capital’s software development team now leverages ChatGPT to develop code at much higher productivity levels across product management, development, test and quality assurance phases. 

Drawing on rigorous fundamental research, data science, machine learning, and AI methods, Increment Capital’s funds have been able to navigate both bull and bear economic and credit cycles, delivering superior risk-adjusted returns with low volatility and low market correlation.

In addition to delivering outstanding investment performance, having top-tier technology talent will become a crucial factor for financial institutions to gain a strategic advantage as new technologies and AI research rapidly become applicable to the financial industry. Companies that prioritize building strong technology competencies, particularly in AI, will capitalize on the opportunities presented by this wave of change, reap substantial productivity gains, and have the ability to harness the latest research in machine learning, which is advancing at a faster pace than human ability to keep up in general.

Unlike most traditional investment firms, Increment Capital integrates diverse skillsets across (i) fundamental investing (private equity, special situations, capital markets), (ii) quantitative investment and (iii) technology to offer superior risk-adjusted returns for its clients. The firm’s trading signals and investment decisions are developed from rigorous and systematic application of investing principles and processes from both quantitative and fundamental investing disciplines.  With software developers comprising over half of our team, Increment Capital is as much a technology company as an investment firm. The company is dedicated to leveraging the most advanced technologies and latest developments in AI/machine learning.  

Increment Capital’s Founding Managing Partner, Von Lam, has over 20 years of experience in global technology private equity, venture capital, and hedge fund investing. Prior to founding Increment Capital, he was a founding investment team member at Clearlake Capital, a $70+ billion U.S. private equity, special situations, and credit investment firm, where he led technology investments and made significant contributions to the firm’s early development. Before that, Mr. Lam also worked for Warburg Pincus, Microsoft, UBS, and JPMorgan. Mr. Lam currently serves as board director and/or advisor to public and private companies such as eCargo, Gbike and Tornado. Mr. Lam is also member of the Board of Governors for the American Club Hong Kong.

Increment Capital’s investment approach has gained substantial trust and support from institutional investors in Asia, including banks, fund-of-funds, corporations, and family offices. Going forward, the firm remains committed to its simple and time-tested investment philosophy. As a steward of capital, Increment Capital places emphasis on downside protection while relentlessly pursuing asymmetric risk-reward to “increment” returns over time through sustainable and repeatable investment processes.

About Increment Capital

Increment Capital is a technology-driven investment manager that fuses technology, artificial intelligence and machine learning methods with a fundamental, research-intensive approach to investing in Asia.  Utilizing proprietary high-speed technology platforms for research, trade execution and portfolio management, the firm systematically identifies and monetizes short, medium and long-term capital market investment opportunities in Asia.  Targeting superior risk-adjusted returns across economic and credit cycles, the firm operates integrated businesses across private equity and public markets.

Based in Hong Kong and Shanghai, the firm is led by a team of investment professionals with strong technical expertise from Google, Microsoft, Amazon and Autodesk, and a unique integration of global fundamental investment and quantitative, algorithmic trading experience at world class organizations including Warburg Pincus, Clearlake Capital, Apax Partners, Capital Group, Goldman Sachs, Credit Suisse, UBS and JPMorgan. The team has experience investing in early-stage venture, growth equity, buyouts, PIPEs, public equity/credit, operational turnarounds, spin-offs and restructurings.

The firm, including its affiliates, is licensed by the Securities and Futures Commission (SFC) in Hong Kong and the Asset Management Association of China (AMAC) in Shanghai.

For further information, please contact:

LT Heyday Culture Communications Co. Limited

Ms Olivia Wei

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Email: [email protected]