Against this backdrop, Laurent Denize, Chief Investment Officer at Oddo BHF AM, shared his vision of the developments currently shaping the industry at a conference held yesterday morning that MarketScreener.com attended. In particular, he detailed how these changes are influencing the development of the asset manager's investment solutions and management strategies.

From local roots to global player: a legacy of innovation

In his presentation, Laurent Denize recalled that the common thread running through Oddo BHF's organic and external growth remains active, conviction-based management: "Our heritage is European equities and innovation: we were also the first to launch a dated fund focused on discounted convertible bonds in 2008. Historically focused on France and Europe, our areas of expertise are now becoming global, combining fundamental and quantitative approaches enhanced by AI, while transitioning from traditional open-ended funds toward ETFs and more flexible dedicated solutions."

The end of the traditional financial analysis model

As for artificial intelligence, Oddo BHF has been working on it since 2017 to improve its investment management processes and generate alpha. (the outperformance generated by a portfolio manager compared with a benchmark index (the CAC 40 or S&P 500). The conclusion is straightforward: the industry is facing an explosion of unstructured data (blogs, social media, webcasts, satellite images) that must be successfully converted into actionable signals.

For Laurent Denize, the world has become more complex: "Macroeconomics and geopolitics have a major impact on equity management strategies that were originally purely bottom-up and fundamental. Traditional financial analysis is no longer sufficient: these macro dimensions must be integrated without distorting the managers' investment philosophy. Finally, market volatility requires stronger risk management to avoid drawdowns that clients are no longer willing to tolerate."

He adds that in the past, "management consisted of accumulating good stocks selected by a research department. This model worked for 25 years, but it is over. Today, the fundamental analyst must work alongside the data scientist to create high-performing teams and tell investors a story they can understand.
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The 5 pillars of technological transformation at Oddo BHF AM

To structure this collaboration between finance professionals and scientists smoothly, Laurent Denize relies on five strategic pillars:

- Risk management: Identifying and measuring the contribution to risk (specific, sector or factor risk: growth, value, momentum) to avoid bets that are too large relative to the benchmark, while controlling portfolio turnover.

- Using unstructured data: relying on tools developed in-house, including a Python tool called Bigquant, which aggregates alternative data (job postings, foot traffic at luxury stores, satellite data) on a dashboard to inform the portfolio manager's thinking.

- Machine learning: analyzing complex interactions between factors and identifying historical patterns. The algorithm assigns probabilities of outperformance to assist the portfolio manager in making decisions, within a strictly discretionary management framework.

- Dynamic natural language processing (NLP): using generative AI to automatically detect new clusters and emerging themes, such as the space sector, across the press and financial literature, where the firm previously used static keywords.

- AI agents, or agentic AI: deploying specialized agents, focused on macroeconomics and microeconomics, supervised by a "super agent" that coordinates them. The key challenge lies in the infrastructure: inference must be managed to optimize computing costs (tokens), consistent quality must be ensured through control rules (KPI/versioning), and conflicting signals must be arbitrated.

Toward the era of the "augmented portfolio manager"

"Our objective is to combine structured and unstructured data through quantitative tools and machine learning to accelerate and enrich decision-making. Oddo BHF Asset Management is thus moving toward an "augmented portfolio manager" model," Laurent Denize concluded.
The augmented portfolio manager is therefore considered a finance professional who relies on artificial intelligence to multiply his or her analytical and decision-making capabilities. The portfolio manager does not give way to algorithms.

The presentation by Oddo BHF's chief investment officer was followed by four thematic workshops led by the group's investment management experts, focusing on strategies emblematic of its product range. Zonebourse.com attended two of them:

ODDO BHF Green Planet: When AI and pragmatism reinvent transition management

The first workshop highlighted the ODDO BHF Green Planet strategy. It showed how artificial intelligence helps select companies involved in the ecological transition.

- A data-driven global equity fund classified as Article 9

Launched in October 2020, Oddo BHF Green Planet is a global equity fund that uses artificial intelligence to invest in listed companies exposed to the ecological transition. It is built around four key subthemes: clean energy, energy efficiency, sustainable mobility and the preservation of natural resources.

To select stocks, the management team relies on a rigorous process. A big data algorithm first builds an eligible investment universe consisting of companies whose business models make a significant contribution to the identified subthemes. A quantitative model is then applied to this limited universe to identify companies with the most attractive financial and risk characteristics.

The management team can adjust weightings at its sole discretion, and the portfolio is monitored continuously. The fund seeks to remain permanently invested in equities, with the objective of generating long-term capital growth while incorporating extra-financial analysis.

This fund is a financial product that seeks sustainable investment within the meaning of Article 9 of the SFDR regulation (financial products in asset management with an explicit sustainable investment objective).

"Our starting point is based on a simple observation: we are operating in an environment marked by massive investment related to the transition, whether in infrastructure, energy, resources, efficiency or economic resilience. Our objective is to identify the companies that are benefiting today, and will benefit tomorrow, from these capital flows. This theme lies at the intersection of energy independence, resource sovereignty, macroeconomic stability and resilience in the face of climate shocks," says Diane Neuville, manager of the Oddo BHF Green Planet fund.

- The three pillars of a strategic investment opportunity

To support this investment thesis, Diane Neuville identifies three fundamental drivers that make this theme unavoidable today:

- economic relevance: "We now have competitive technologies that can be deployed rapidly. Take artificial intelligence, for example: hyperscalers have an immediate need for electricity. To move quickly, they will favor solar panels or gas turbines over nuclear power, even though the latter technology remains attractive over the longer term."

- the geopolitical context: "Tensions in Ukraine and the Middle East require supply chains to be secured. Highly proactive industrial policies are being deployed in Europe, the United States and China. In Europe, the 2022 crisis placed energy independence at the top of the political agenda. The resulting massive investment plans are flowing into our companies and supporting their growth."

- resilience in the face of physical constraints: "Demand for electricity is rising while infrastructure is aging. Our power grids are no longer adapted to current loads or to managing two-way flows. The same applies to water management, whose optimization is becoming critical."

- Electrification, the energy mix and bottlenecks

Beyond these pillars, the portfolio manager explains that electrification is the real common thread running through the strategy: "While global demand had stagnated, we are seeing a renewed acceleration driven by industry, transportation, buildings and data centers. In the United States, growth in demand from utilities has risen from 0.5% per year to rates of 4% to 6%."

To address this demand shock, she advocates a diversified approach to the energy mix: "Solar and wind, combined with battery storage to offset intermittency, offer solutions that can be deployed quickly. Nuclear power retains its place, but on longer deployment timelines, of five to eight years. We therefore approach it cautiously."

- The investment process: from NLP to quantitative screening

Marie-Lidwine Tardif, her colleague and co-manager, then took the floor to explain how this strategy is implemented operationally on a daily basis. She detailed the asset selection process for the fund, which is structured in several stages:

- Building the universe through Natural Language Processing (NLP): "To cover a global universe without biasing our analysis, we use an NLP algorithm on a vast database of press articles and financial publications. It cross-references precise keywords and targeted technologies with listed companies, thereby avoiding greenwashing."

- Quantitative screening and valuation: "Once the thematic universe has been defined, we apply standard quantitative filters: valuation ratios, earnings revision momentum and price momentum."

- Portfolio construction and risk management: "To avoid making one-off bets on a single stock or being swept up in fashionable trends on social media, we diversify our positions across each link in the value chain."ODDO BHF Artificial Intelligence: Capturing the cognitive revolution and the creation of abundance

Oddo BHF Artificial Intelligence: investing in the cognitive revolution and abundance

After exploring the opportunities presented by the ecological transition, the second workshop attended by Zonebourse.com focused on the other major area of innovation at Oddo BHF AM: the strategy dedicated to the technological revolution.

- AI serving investment management and an Article 9 commitment

Launched in December 2018, ODDO BHF Artificial Intelligence is a thematic global equity fund that combines artificial intelligence with fundamental analysis. This hybrid approach aims to identify the subthemes with the greatest potential to generate alpha, as well as innovative companies linked to the AI ecosystem.

From an extra-financial perspective, the fund's sustainable investment objective is to contribute to reducing carbon emissions and capture the opportunities arising from the transition to a low-carbon economy. Following the initial AI-assisted selection of the investment universe, ESG and carbon analysis further narrows the universe to meet these strict requirements. Actively managed by the investment team, the fund is therefore classified as Article 9 under the European SFDR regulation.

"Our investment philosophy is based on selecting exceptional companies that meet several criteria: sustainable long-term growth, high gross margins resulting from monopoly or duopoly positions, top-tier management, the integration of AI and exemplary carbon emissions performance," explains Brice Prunas, the fund's manager.

- Investing in abundance: a change in the market regime

To explain the strategic vision guiding his investment choices, the portfolio manager shares a strong view of the technological disruption underway: "Investing in AI today means investing in abundance. We are experiencing the first historic decoupling between wealth creation and human labor thanks to virtual agents. With the mathematical capabilities these technologies have reached, we are on the verge of major scientific, medical and physical discoveries: we will achieve in five or 10 years the progress that previously required a century," he notes.

But beyond the concept, acting on this conviction requires continuous adaptation to the market: "That is why we do not invest only in the factories of AI, namely infrastructure, semiconductors, network equipment and energy, but also in all the sectors that will benefit from it," the manager adds. "Since this summer, we have entered a new market regime: simply having blind exposure to the theme is no longer enough to outperform, we need greater diversification," he specifies

- A global map spanning established champions and future gems

To implement this diversification, the AI fund's management team has strengthened its geographic footprint. Exposure to North America has recently been reduced in favor of Asia and emerging markets, which account for up to 15% to 20% of the fund, particularly China, South Korea and Japan.

In practice, the portfolio is organized around two complementary sleeves:

- A majority core sleeve comprising long-term champions: they can be found across a wide variety of sectors, not just technology. These are fundamental pillars that the portfolio managers retain as core holdings, notably because of the strength of their business models.

- A satellite sleeve comprising lesser-known and more innovative companies. This sleeve is dedicated to smaller companies with strong valuation potential in blockchain, fiber optics, innovative healthcare, physical AI and Chinese semiconductors.

To conclude his presentation, Brice Prunas emphasized the fund's true nature: ODDO BHF Artificial Intelligence is not simply a technology fund, but a global thematic equity fund managed with consistent risk discipline.