INSIGHTS News

Dr. Carolina Minio Paluello joins Arabesque AI, Arabesque Group’s technology arm, which is dedicated to developing deep tech solutions for the asset management industry.

Dr. Minio Paluello joins from Schroders to lead the roll-out of the firm’s cloud-based portfolio management service capable of producing and running millions of active, hyper-customised investment strategies at the click of a button.

Powered by a deep learning AI engine and market leading impact data, Arabesque AI’s platform generates active portfolios in minutes, at a fraction of the typical cost, to meet client preferences at scale.

Arabesque AI’s proprietary engine monitors and estimates returns and sustainability across a universe of more than 20,000 stocks to generate alpha while integrating impact outcomes and aligning portfolios with regulatory requirements including SFDR.

London, 26 January 2023 – Arabesque AI has today announced the appointment of Dr Carolina Minio Paluello as its new Chief Executive Officer and to the group’s executive committee. Dr. Minio Paluello will lead the roll-out of the company’s AI-powered portfolio management service. The new platform is the second release from Arabesque, following the launch of ESG Book in 2021, which has become the world’s largest independent ESG data repository.

Dr Minio Paluello joins Arabesque AI from Schroders, where she oversaw product, solutions and quant operations. Prior to this, Dr Minio Paluello led the integration of sustainability into product solutions at Lombard Odier following more than a decade at Goldman Sachs Asset Management, where she led quant strategy across client portfolios.

A growing client demand for thematic and impact-focused strategies[1] coupled with the rapid growth and closer regulatory oversight of the Environmental, Social and Governance (ESG) investment market is requiring a fundamental shift in the way that asset managers generate, manage, and label strategies.

Producing the volume of strategies needed to meet these demands requires significant capital expenditure, headcount and non-financial, technical capability. Few asset managers are equipped to meet these demands,[2] and the shift comes as profit margins across active investment management decline.[3]

A cloud-based, AI-powered service to generate and manage active, hyper-customised portfolios in minutes, Arabesque AI provides asset managers with a low-cost technology service to meet these challenges. Asset managers can integrate the service fully into their existing platforms via an API or construct active model portfolios managed via a daily data delivery.

The platform enables asset managers to generate personalised, active investment strategies at scale. Using deep learning and raw ESG and sustainability data for more than 30,000 companies from strategic partner ESG Book, Arabesque AI automates the complex and costly processes of integrating multiple financial and non-financial dimensions and preferences into portfolios. The engine also ensures portfolios align with core regulatory requirements such as the EU’s Sustainable Finance Disclosure Regulation (SFDR), generating portfolios compliant with SFDR Article 8 and 9 labels as required.

Arabesque AI’s alpha engine estimates returns across a universe of more than 20,000 stocks, assessing billions of data points against multiple dimensions daily. The engine represents an evolution of quant investing, moving from a factor-based approach to a machine learning model to meet today’s multidimensional analysis requirements by assessing more than 250 features.

Integrating market leading ESG and impact data into its platform, Arabesque AI’s service enables asset managers to meet detailed client preferences by generating thematic investment products aligned with impact outcomes from climate pathways to the UN Sustainable Development Goals (SDGs).

Dr. Carolina Minio Paluello, CEO at Arabesque AI, said:

“Arabesque AI is uniquely positioned to service the asset management industry’s need to meet the growing market demand for hyper customised portfolios. Our combination of AI and quality impact data means that asset managers of any size can integrate impact as well as risk and return into their strategies, constructing active portfolios that reflect their clients’ preferences, whether retail, high-net-worth or institutional.”

Georg Kell, Chairman of Arabesque Group, said:

“There is an annual funding gap of more than $3.7 trillion dollars preventing the effective fulfilment of the UN SDGs. By comparison, there is more than $150 trillion of global investment assets under management. Clearly, investors have a significant role to play. Arabesque AI is harnessing sustainability and technology to empower capital markets to drive finance towards solutions that will generate the impact required to meet the SDGs head on.”

Tim Wong has also been announced as Chief Product Officer of Arabesque AI. He joins from Finbourne Technology, where he oversaw product development for investment and portfolio management software. This follows over a decade of experience in product management and strategy consulting at Amazon, Capco, McKinsey and PwC.

Tim Wong, who joins Arabesque AI as chief product officer, said:

“Personalised portfolios demand the integration of multiple new data dimensions, complex regulatory compliance requirements and tech expertise outside of the typical asset manager’s capabilities and resource. Arabesque AI solves these problems by combining market-leading ESG and impact data with deep learning to provide a simple, cloud-based solution that asset managers can use out of the box and integrate into any existing investment workflow.”

Dr. Minio Paluello’s appointment as CEO is pending regulatory approval by the Financial Conduct Authority (FCA).

[1] Four in five asset managers see customisation as a key growth driver. (The Future of Asset Management, Accenture)

[2] One-third of US asset managers reported that they lost or were at risk of losing over 20% of their institutional mandates because of their inadequate ESG capabilities. (A Blueprint for Leading in Sustainable Investing, Boston Consulting Group)

[3] 14% decline in profit margins over the last 3 years. (Global Asset Management 2021: The $100 Trillion Machine, Boston Consulting Group)