State Super has appointed an independent academic oversight body for its investment data science program.
The fund said the use of data science is growing, though using insights from more complex machine learning based models requires a strong governance process.
In response to this growing need, the fund has appointed Michael Kollo David Michayluk and Alex Antic to be the inaugural members of the Academic Oversight Body (AOB).
The fund said the AOB aims to provide oversight to the development of the investment data science capability.
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State Super chief executive John Livanas said the challenges faced by funds, of minimising downside risk while pursuing strong returns, in a liquidity constrained manner, are well known.
"Charles and his team have developed machine learning algorithms that have been helping us to effectively assess financial conditions and assist our decision-making processes," Livanas said.
"This has led State Super to maintain superior returns, with significantly lowered risk. The AOB will assist State Super's governance of our machine learning models and grow our investment data science capabilities, at a time when the speed of change in markets, and development of machine learning and artificial intelligence research increases."
Kollo has been appointed as inaugural chair of the AOB. He gained his PhD in Finance from the London School of Economics and has extensive industry experience in the application of quantitative statistical methods at Blackrock, Fidelity, AXA Rosenberg and HESTA.
"The increasing scale and sophistication of capital markets drives asset owners toward using more types of data and new technologies, including AI, to help in their decision making," Kollo said.
"Having an appropriate governance framework and technical resources to oversee and guide their development not only helps members get a better outcome, it is a way for State Super to tap into the best Australian academic talent."
Of the other members, Michayluk is head of the finance department at UTS Business School and earned a PhD in Finance at Louisiana State University, and Antic is head of data science at Australian National University.
Reporting to the State Super Management Investment Committee, the AOB will oversee the use of data science and machine learning.
State Super chief investment officer Charles Wu said: "State Super understands the potential value that the data science program will bring, and a robust governance framework has been developed to ensure the insights are carefully integrated with our investment process and governance framework."