Around the world, people are streamlining their everyday tasks by asking Siri or Alexa for help. And now, the chatbot concept is becoming useful in fixed income investing.
AllianceBernstein has introduced a chatbot called Abbie for its professional investors to use.
“We’ve integrated Abbie into all areas of our investment process to help us invest prudently and efficiently,” says Jeff Skoglund, the firm’s chief operating officer for fixed income.
In 2018, the firm launched Abbie 1.0, a simple-order building technology. “And so a portfolio assistant might ask Abbie to build orders to buy $30 million of a certain bond for a certain account. And she would.”
That version of Abbie could also perform the various required compliance checks and other steps in the process. “And this sounds easy, but you know, doing this for 10, 20, 50 accounts at a time can be very time-consuming and it can become a very tedious task that, not done well, can lead to errors,” says Skoglund. “And we’ve found, through automating this process, that it improves the experience of the investment professionals. They can be much faster with the process.”
Abbie’s process is tight from an integrity standpoint and allows the firm to eliminate errors and get to market faster with trades, he adds.
In 2019, the firm launched Abbie 2.0, which makes suggestions for trades. For example, a portfolio manager might ask Abbie to search for bonds available in the marketplace that meet various objectives. Abbie can then perform a complex screening process on a real-time basis and find bonds that might have otherwise been missed.
“This is where we start to, not just use robotic process automation and Abbie to make things more efficient, but to do things better than humans can do in a manual way,” Skoglund says.
Abbie works in combination with other tools like ALFA, which the firm developed in 2015 to help screen for liquidity. Historically, the investment process involved a combination of quantitative and fundamental research, which is funnelled through to analysts, a committee and through the portfolio construction process. Then, the firm selected various bonds to try to execute trades, which required finding liquidity.
“The problem is that liquidity is so sporadic and inconsistent across [much of] the fixed income universe that a high percentage of good ideas die at that point because we cannot source those bonds,” Skoglund says.
Yet, if the trade is screened through ALFA to source liquidity before it heads to Abbie, the firm can apply the same process without wasting time. “We’re only focused on actionable ideas that we know have dual advocacy from quant research and fundamental research. And it makes for a much more focused selection process.”
And hopefully, with more focus comes better decision-making, as people can spend more time per decision than in the previous process, adds Skoglund.
Abbie allows the investor to engage with various tools at once in a way that’s user-friendly and allows them to tackle classic investment challenges using new technology, which can help empower employees.
“It empowers them to be more effective in their jobs and be better investors. It enables them to eliminate non value-added, tedious, repetitive tasks in their daily work lives and focus on . . . more value-added activities that really form the core of why they joined the investment management business in the first place.”