---
title: "6 Predictions Heading into 2019"
url: https://stacklist.com/card/9744fd35-aaf9-4b5d-9449-26e9899e5e82
source_url: "https://www.linkedin.com/pulse/6-predictions-heading-2019-david-m-aferiat/?trackingId=HFwq%2BAgkQ%2B2%2BoxBcyU6UUg%3D%3D"
stack: https://stacklist.com/c/education/stack/3701d09f-5d84-426c-aef0-e129d294445b
summary: "David M. Aferiat provides six predictions for 2019 covering hedge fund asset management, performance, strategy trends, AI/machine learning adoption, cryptocurrency investment, and industry challenges. The analysis emphasizes that hedge funds using advanced technology, big data, and machine learning will outperform those relying on traditional methods in an evolving market landscape."
tags: "hedge-funds, fintech, predictions-2019, machine-learning, artificial-intelligence, market-analysis, investment-strategy"
key_entities: "David M. Aferiat (person), CMT (organization), NAAIM (organization), The Trade (organization), machine-learning (technology), artificial-intelligence (technology), big-data (technology), hedge-fund-strategies (concept), passive-vs-active-management (concept), cryptocurrency-investment (concept), 2019-market-predictions (event), U.S. (location)"
classification: "analysis"
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acp_version: "0.2"
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visibility: public
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status: "final"
---

# 6 Predictions Heading into 2019

I'm asked at conferences and by editors for forecasts and predictions heading into 2019 on what the landscape will look like for hedge funds, FinTech, and the markets. Many of these answers come from this year's collective conversations with subscribers, market friends, our growing social media following, and interactions with great organizations like CMT and NAAIM. Here are the answers I gave to an editor's questions. 1.) Your prediction for how much global hedge fund assets under management will increase/decrease, on a percentage basis, during the 12 months ended Dec. 31, 2019 (e.g., increase 10%, decrease 5%). We foresee a decrease on 10 - 15%, similar to 2017 outflows with at least $220 billion in active management outflows. In 2017, investors placed $220.4 billion into U.S. equity passive funds and pulled $207.5 billion out of U.S. equity active funds. 2.) Has hedge fund performance during recent market turmoil helped or hurt the case for actively managed hedged strategies? How will it affect investor sentiment heading into 2019? The market turmoil now and headed towards us separate which hedge funds are prepared to see market opportunity more clearly than others. Only the funds evolving technology ahead of an evolving market will help the case for actively managed hedged strategies. Those without these table stakes won't be in the game. 3.) Which hedge fund strategies will attract the freshest capital in 2019, and which will experience net outflows? Hedge fund strategies borne from data derived from multiple sources, previously silo'd, and tested and optimized over millions of simulated and walk forward scenarios, will persevere in 2019. The competencies to perform such rigorous analysis come from mastering Big Data sets which most often mean applying machine learning AI capabilities. 50% of hedge funds surveyed this summer (The Trade, UK) are using AI for investment decisions. Over 2/3 are using AI for idea generation, while only 1/3 use AI for execution/routing decisions. 4.) Will the use of artificial-intelligence and machine-learning techniques result in improved hedge fund returns -- or will those tools lose their edge as more and more managers adopt them? Machine learning AI does not lead to a singularity or one shared thought/approach/answer. AI requires parameters and rule sets imparted by data scientists who begin and end with different objectives in mind. If I gave you the recipe for the best, most delicious macaron you'll ever taste, the very differences in geography, altitude, access to ingredients, etc. would yield different results. 5.) Among the top 200 hedge fund managers measured by assets, what percentage will be investing in cryptocurrencies at year end 2019? I took a pass on this question, but this is a BTFD moment. 6) What is the biggest challenge/disruption facing the hedge fund industry over the next 12-24 months? The application of old methods and models to a market poised to punish such approaches by participants capable of seeing both long and short term patterns with more clarity. This is same challenge I would have written in 2014, 2010, etc. I look forward to looking back at these answers in 2019, to see compare to what happens. How would you answer the same questions? Please comment. Best, David