WilmotMLMacro Advisory ∙ Machine Learning ∙ Investments

Jonathan Wilmot

September 2017

Machine Learning and the Global Outlook

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The Thesis

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Combining human and machine intelligence together will be the great project of coming decades. It is likely to transform or touch most aspects of economic life, disrupt or challenge most of our existing social and democratic institutions, and profoundly change geo-politics and the technology of war

Key Secular Themes

• AI Everywhere • New Energy and Transport• Smarter Healthcare• Designer Genes• Connected Cities

All material contained in this slide is the intellectual property of WilmotML Ltd. Materials have been provided for the clients’individual use. Past performance is no guarantee of future performance.

Transformation

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Man andMachine

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All material contained in this slide is the intellectual property of WilmotML Ltd. Materials have been provided for the clients’ individual use. Past performance is no guarantee of future performance.

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Human Intelligence Machine Intelligence

Meaningful generalisationfrom small data sets

Creation of rich conceptual models

Mostly require large data sets

(Beyond) Human level performance in small number of problems: - speech recognition- object recognition- video game learning,

etc.

Such models allow for:- prediction- action- communication- imagination- explanation- composition- reconfiguration

Pattern Recognition and Model Building

Pattern recognition(and some Model Building)

Mainly predictive models

Human VS Machine Intelligence (Simplified)

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The future belongs to those who understand at a very deep level how to combine their unique

expertise with what algorithms do best

Pedro Domingos: The Master Algorithm 2015

5All material contained in this slide is the intellectual property of WilmotML Ltd. Materials have been provided for the clients’individual use. Past performance is no guarantee of future performance.

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Two Views on Productivity

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Two Views on Productivity

7All material contained in this slide is the intellectual property of WilmotML Ltd. Materials have been provided for the clients’individual use. Past performance is no guarantee of future performance.

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Growth in Real GDP per Capita, 1300 – 2075

UK Real GDP Growth Per Capita US Real GDP Growth Per Capita

US Real GDP Per Capita Forecast Optimist US Real GDP Growth Per Capita Pesimists

Robert Gordon View

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US Output Per Hour (Log Level)

US Q4 1960 - Q1 1991 US Q4 1994-Present

Is Productivity Growth Just Resting?

8All material contained in this slide is the intellectual property of WilmotML Ltd. Materials have been provided for the clients’individual use. Past performance is no guarantee of future performance.

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Machine Learning in Fund Management

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Is this a Leopard?

10All material contained in this slide is the intellectual property of WilmotML Ltd. Materials have been provided for the clients’individual use. Past performance is no guarantee of future performance.

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AI Expertise vs AUM (Stylised)

11All material contained in this slide is the intellectual property of WilmotML Ltd. Materials have been provided for the clients’individual use. Past performance is no guarantee of future performance.

Everyone Is Doing It: AI Expertise vs AUM

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Global Outlook

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log(HML) Trendline Upper bound Lower bound

US Equities: Value Vs Growth(HML)Trendlines: June 1926-July 2017

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Slope: 4.65%

All material contained in this slide is the intellectual property of WilmotML Ltd. Materials have been provided for the clients’individual use. Past performance is no guarantee of future performance.

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Risk Appetite Vs Industrial Production

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Jan-00 Mar-02 May-04 Jul-06 Oct-08 Dec-10 Feb-13 May-15 Jul-17

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All material contained in this slide is the intellectual property of WilmotML Ltd. Materials have been provided for the clients’individual use. Past performance is no guarantee of future performance.