On the 22nd of August, Adina Grigoriu, CEO & Co-founder of Active Asset Allocation has been interviewed by Linda Labidi, journalist, for the “Objectif Croissance” show by BFM Business.
Watch the full 5-minutes interview (in French):
Read the English translation:
Linda Labidi: We continue with you Adina Grigoriu, hello!
Adina Grigoriu: Good morning!
LL: Finally, a woman! Thank you for being with us! (Laughter)
AG: Thank you for inviting me.
LL: So, co-founder and CEO of Active Asset Allocation. Your business is the design of investment solutions, we’ll talk about it in a while, your focus is mainly institutional investors. Can we talk about assets under advisory?
AG: Absolutely. We advise investors on how to invest their money through algorithms. Algorithms are a concept old as Finance, and we brought a different vision of risk be measured. So, when everyone talks about volatility, valuate risk, which actually means nothing to investors, we came up with this concept of maximum Drawdown (maximum loss in capital).
We have built our algorithms around the management of maximum loss, working on a risk management approach. Here again, we innovated since when we talk about risk management, there are globally 3 ways to do: diversification, portfolio hedging, or portfolio insurance. Investors generally oppose these approaches. What we have done is say that we should not oppose them but use them together so that risk management becomes a new source of performance for the portfolio.
And this has two consequences for the client. First, every time an investment decision is made, its goal and constraints are at the heart of the process. And finally, he obtains a better performance.
LL: It’s exciting! Now, it’s true that in your area of activity, Artificial Intelligence has come toshake up the codes, I imagine favorably. What has this actually changed for your business?
AG: We have integrated Artificial Intelligence for several years and we use it in several ways. For instance, to optimize the algorithms, when we calibrate a model, we work on thousands of prospective markets scenarios and for each a monthly decision and many parameters to adjust.
When we started, it was taking us 8 weeks to calibrate a model. Today with the help of Artificial Intelligence, it only takes a few hours and we are sure to find an optimum. It’s one way of using it. Another way is the development of self-learning algorithms. We work on advanced stress indicators in equity markets to warn our clients of a future crisis in these markets.
LL: I have defined 3 major areas for your clients, tell me if it’s good: institutional, pension funds and asset managers? We heard how you do it, what are their expectations exactly? What are the market expectations today for your business?
AG: There are several of them. We are in a rapidly moving market, and a highly regulated one. For instance, the brand new “Loi Pacte” that reforms French retirement plans is completely disrupting the landscape and the cards will be redistributed between insurers and asset managers.
So, customers expect both a deep knowledge of the market and techniques, which is of course our case. They also expect us to be a source of proposal in innovation. They expect to have in front of them people who understand them and understand the needs of their own clients.
LL: Probably also people who may still have a head start in terms of innovation, as mentioned earlier when we talked about Artificial Intelligence. It should be recalled that you are a FinTech, what does the digital bring to your company today?
AG: So far, we were only making algorithms and our clients were using the output. Today we have encapsulated these algorithms in a digital platform with a B2B part to allow our customers (asset managers typically) to follow their portfolios daily, but also to have instant reporting, and to be able to introduce market views in a risk model so there are some nice things that allow interaction with the customer.
We have now developed a whole B2B2C platform to help the distribution networks of our clients, typically insurers, to do all the client on-boarding, risk profiling, etc. But also, simulators to help them understand how each decision they make will influence their savings goal.
LL: In 20 seconds: you have raised 4 million euros, what are these funds for today?
AG: They help us to continue to innovate, as much on algorithms as on Artificial Intelligence and digital. We are pleased to have today as shareholders Allianz, MAIF and an investment fund of the South Region.
LL: Thank you for being with us, we will follow this!
AG: Thank you.