How Nan Fung family office harnesses AI, big data for investments
NF Trinity, Hong Kong business conglomerate Nan Fung Group’s family office, sees artificial intelligence (AI) and big data as pivotal for investment management. The firm is actively training staff across various teams to master these relevant technologies, according to its chief operating officer.
“We need to ensure that the team is trained with the mindset and will be able to provide constant feedback,” said Janet Hung, COO of NF Trinity, at AsianInvestor's COO Forum in Hong Kong on September 24.
NF Trinity manages a multi-asset portfolio globally spanning public and private markets across over 20 geographies. It has over 40 staff, including more than 20 investment professionals.
The family office runs a proprietary data analysis team, which managing director Helen Zhu led in building from scratch after she joined from BlackRock. The investment chief has since been focusing on institutionalising the family office and streamlining operations.
The data team, developed over about three years, has successfully enhanced the investment process. It is now integral to the investment team, with investment reports incorporating big data insights to inform decisions.
“Once people get used to it, and it becomes a habit, and they feel that is actually providing extra alternative insights, apart from the traditional investment research, which then helps to support and enhance investment return,” she said.
However, the operating chief acknowledged that it is “really expensive” to build a data team, stressing selectivity in data purchases.
“We can't purchase everything, and we have to evaluate constantly on the cost of the data and the models,” she said. “It's a finite resource, and we should be using it carefully.”
In addition to data purchases, the family office extensively collects alternative data through its advanced web scraping technologies.
To promote technology adoption, NT Trinity has also rolled out trainings to enhance AI knowledge across teams and foster a culture that embraces emerging technologies, including the use of Microsoft Copilot, a GPT-4-powered generative AI chatbot in the workplace.
SOUND RISK MANAGEMENT
Besides technology implementation, Hung emphasised cross-team collaboration, including investment and operations teams, to maintain robust risk management.
“They all need to discuss different types of risks, including reputational risk,” she said. For many family offices, reputation of the family outweighs the pure pursuit of financial returns.
To effectively manage risks in a volatile environment, she also highlighted the need for a robust risk management system, in which all portfolio exposures are covered through various risk metrics, such as stress tests under different shock scenarios.
“I would say in the past, it seems that the East side is more unpredictable. But then recently, I'm more and more feeling the West is also equally unpredictable,” she said.
She cited geopolitical risk as an increasing consideration, especially for a family office based in Hong Kong.
“We never need to worry about in the past of how we hold certain investment [that is] not from tax or financial perspective. But now we started to think about it from a geopolitical standpoint, how do we do that to best protect [the portfolio]? I think this is definitely one of the things we start to think a lot more carefully right now,” she said.
This article has been updated with revised information on AI adoption.