Automation and its implications

Funds Management

by Clive Tompkins

Jason Hazell: Hi, thanks for joining us. Today, I'm talking with Simon Blanchflower from Altrinsic Global Advisors about the automatic opportunity. Welcome, Simon.

Simon Blanchflower: Thanks for having me here, Jason.

Jason Hazell: What do you actually mean by the automatic opportunity?

Simon Blanchflower: Well, it's really the ongoing developments in the tech space where we'll see further developments in automation, simple as that. Now, automation's been around for many years, of course, but with big data now becoming a huge thing, plenty of data in the cloud, for example, and computing power becoming ever greater at lower cost. There's much more opportunity to automate a lot more things than we did in the past.

Jason Hazell: Is it the big data that is the big change from the internet revolution, say, 15, 20 years ago?

Simon Blanchflower: Exactly. Really, you could almost say it's the internet revolution 2.0. we've been using iPhones, smartphones, obviously computers, iPads, and every time we're talking to each other through social media, we're generating more and more data creating masses amounts of data in the cloud. The more data there is, the more accurate some of the automation initiatives can become.

Jason Hazell: How do you see this opportunity evolving over the coming years, Simon?

Simon Blanchflower: Well, it is a huge opportunity as far as automation is concerned. Mackenzie came out with a report earlier in the year that suggested that 60% of all occupations will have 30% of their tasks automatable, so that translates into quite big numbers as far as labor is concerned, so roughly a billion full time employee equivalents and round about $16 trillion in wages, so very, very big numbers. The question is is what happens to all that labor and that's something that we don't know at this point it's often harder to predict what industries, what other careers won't be made available because of these changes.

Jason Hazell: There's definitely been an acceleration in the pace of change. How do you think we're gonna deal with this acceleration in change?

Simon Blanchflower: Yeah, it certainly will be one thing that will hit us quite quickly, and I think human beings have a great ability to overestimate what we can do perhaps over the next year, but grossly underestimate what we can do over 10 years, so I think it will hit us quite surprisingly. What we don't know, of course, through this automation is what other opportunities or industries or jobs will be created even though some will obviously be reduced.

Jason Hazell: Well, that's a good point. What opportunities do you think this provides fund managers such as Altrinsic?

Simon Blanchflower: Well, for us, really, there's two ways to think about this because it is very disruptive, and I think either we invest in the disruptors or you avoid the losers. Sometimes, it's not easy to pick the disruptors, as many cases in history where that's not been an easy thing to do. It's much easier to avoid the losers.

Jason Hazell: I noticed in what you've written, and I'm particularly interested in this intersection between healthcare and technology. Can you elaborate a bit further on it?

Simon Blanchflower: Yeah, sure. There's two big parts to that. What one is the collapse of the cost of sequencing the human genome and what that means for the big data in terms of human genetic information that's out there. The more data out there, the more likelihood it is that different labs all around the world are gonna create associations between genetic differences on mutations and disease. That's a very important point in terms of learning more about human biology. The other is simply using artificial intelligent techniques to identify things like cancer or different types of biopsies. For example, recently, Google used an artificial intelligent method which has been used to identify cats in videos. That particular method is actually good at identifying skin cancers, as well, for example.

Jason Hazell: Okay. In general as a fund manager, how does Altrinsic deal with periods of change?

Simon Blanchflower: Well, for us, the most important thing, really, is being embedded in industry food chains. Just staying close to our companies, doing our bottom up research, and just connecting more dots and having that strong 360 perspective. That's the most important thing for us.

Jason Hazell: Great. Well, many thanks for your time today, Simon.

Simon Blanchflower: Thank you, Jason.

Jason Hazell: Thank you for your time today.