Michael Jordaan-backed AI-powered investment company closes shop in South Africa

AI-driven investment fund manager NMRQL (pronounced “numerical”) has closed its South African offices and restarted as AI Asset Management.

Based on the company’s CIPC records, it was shut down sometime in April or May 2023. The company registration was transferred to Methodical Capital Management.

Backer Michael Jordaan and NMRQL CEO Thomas Schlebusch also officially resigned as directors of the company.

Although NMRQL’s company registration dates back to 26 August 2014, the startup officially launched in October 2017.

NMRQL used quantitative research and algorithmic trading to manage investment funds.

It began with the NMRQL SCI Balanced Fund, administered by the Sanlam Collective Investments platform.

The company said its asset allocation and stock selection were managed using machine-learning algorithms.

NMRQL also said the algorithms allowed it to discover hidden patterns in the vast volume of underlying data it processed.

Later, NMRQL began managing two Absa funds under an advisory agreement with the bank’s Alternative Asset Management division.

MyBroadband’s 2020 analysis of these three funds showed that they were generating fair returns relative to their benchmarks and the rest of the market.

However, a 2022 Daily Investor analysis indicated that they were starting to perform poorly.

Our latest look at the NMRQL SCI Balanced Fund’s performance data from 31 December 2022 showed that it woefully underperformed its benchmark over five years.

It looked even worse when compared to the JSE All-Share and the MSCE World indices.

NMRQL SCI* Balanced Fund — 31/12/2022
Period NMRQL Fund Benchmark JSE ALSI MSCE World (Satrix Feeder)
1 month -1.37% -1.08% -2.26% -3.77%
3 months 1.45% 6.91% 15.16% 3.15%
6 months -3.46% 6.80% 12.95% 6.99%
1 year -16.81% -0.17% 3.58% -15.31%
3 years -1.49% 26.36% 43.22% 36.19%
5 years -12.72% 33.39% 46.79% 85.05%

Michael Jordaan said they closed the company in South Africa because its algorithms work better in larger, more liquid markets than the JSE.

“For machine learning to outperform, it ideally needs many liquid stocks to pick from,” Jordaan said.

News of AI Asset Management’s launch first emerged in March last year.

Jordaan said that the firm was already using its algorithms to invest on the NASDAQ stock exchange in the US.

“My partners and I have been working with algorithmic decision engines for over 30 years, and actively invested in companies using AI-powered tools for the past eight years, through our first two funds,” said Jordaan.

“More recently, many machine learning models have surpassed human-level performance, and the size of the datasets used to train these models has exploded,” he added.

“We believe that we are at an inflexion point in terms of the value that companies are able to derive from AI.”

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Michael Jordaan-backed AI-powered investment company closes shop in South Africa