Understandable Artificial Intelligence

Our Story
The Problem
EDS Solution
EDS A.I. Implementation
EDS Infrastructure
The Market
Financials and Unit Economics
Funding Goals

Founders & Our Story

Revolutionizing Decision Making

Arising from inability to incorporate all inputs, simultaneously

EDS's success will enhance the business process across financial services -- leading to improved, personalized outcomes

EDS Software Solution - First of its Kind

EDS developed the first software to solve these problems

EDS A.I. Implementation

Machine Learning

Human + Machine Insight

Best Trade-offs In A Complex World

Broader, Deeper, More Detailed

Extending research from Stanford our modelling process flexibly incorporates data and checks for robustness

Combining the power of distributed computing, our A.I. solves problems simultaneously by combining optimization with an approach inspired by genetic algorithms

Our custom built data infrastructure combines many of the latest open source foundations which we have extended to meet today's needs

Artificial Intelligence

Big And Fast Data

EDS A.I. Implementation

Software which incorporates more data and simultaneous decision making

On The Shoulders Of Giants

EDS's mathematical insights extend current best practices

\small Utility = \underbrace{\small \mu}_{\text{\tiny Return}} - \underbrace{\small \lambda \tiny 1 \small \cdot \sigma}_{\text{\tiny Variance}} - \underbrace{\small \lambda \tiny 2 \small \cdot TEV}_{\text{\tiny Tracking Error}} - \underbrace{\small \lambda \tiny 3 \small \cdot TFS}_{\text{\tiny Factor Sensitivity}} ...

Building on current methods adds to interpretability and transparency
Extendable frameworks allow inclusions from other models and insights
- Tail-Risk, Diversification Ratio, Black-Litterman, etc.

1950s

1980s

2010s

An Extendable

Framework

EDS Tech - Best Possible Mix

Cutting edge technology with focus on ease of interpretation

Where EDS Differs

EDS improves results across dozens of metrics at the same time

The EDS Infrastructure

The EDS Infrastructure - Big Picture

Cloud Resources

Seamlessly combine physical & cloud resources which can be dynamically managed

EDS Data Center

Combined Computing Power

Client Interface

EDS Technology Stack

Scala

Zookeeper

Principals

Asynchronous
- Actions occuring at the same time, in any order, without waiting on each other
- Current solutions are sequence oriented
Distributed
- Connecting many smaller systems to work together
- Current solutions grow by sequencing faster
Modular
- This principal means components can be easily repurposed
- As opposed to current monolithic designs

EDS infrastructure design is driven by 6 key principles

Principals (cont)

Scalable and Redundant
- Built expecting failure and can easily 'drop-in' new resources live
- Current solutions would need to be shut down and migrated
Analysis Focused not Storage Focused
- We store data multiple times, in multiple forms, focused on insight
- Current solutions minimize storage cost, but make insight costly
Flexible Data Consumption
- Takes all data comers, SQL, NoSQL -- structure, unstructure
- Current solutions have strict data structure requirements

These principals represent a revolution in solution design

The EDS Infrastructure - Components

Each component of the technology stack leads towards our infrastructure principals and a more effective solution

Cassandra	Database	Meets All	Puts Data of Any Kind Closer To Analysis For Speed and Flexibility
Hadoop	Distributed Disk	Meets All	Quickly Consumes Any Type of Data
Mesos	Scheduler	Meets All	Coordinates Tools for 'Drop-in' Flexibility
Zookeeper	Failover Coordinator	Meets All	Coordinates Redistribution of 'Duties' During Failures Or When Connections Are Dropped
Spark, Scala, and R	Analytics	Combined -- Meets All	When Combined, Tools Provide Analytics In Ways That Align With Principals
Play	Front-End	Meets All	Visualizes to client and collects client information

Component	Purpose	Principal	What It Does

The EDS Infrastructure - Security

Point to point encryption over the network
- Data is never exposed without encryption
Client to server encryption
- In line with best practices at banks. Each client session is encrypted regardless of where the client is connecting from
Cloud compute not cloud storage
- We use the cloud for compute power not storage, we control the physical location of each data point
Multi-tiered security layers
- Designed with multiple layers of security so each must be compromised separately

Always at the top of our list

EDS Infrastructure - Summary

Scale and speed
- Add nearly an unlimited number of 'factors' - qualitative/quantitative
- Can run in seconds/minutes and so could be done 'live' for clients
- Each analysis is applied for all
Data communication - goodbye to silos
- Each part of the business process can share information
More in depth client feedback
- Better understanding of client interest

These features make possible real advances 'on the ground'

Current Industry Focus: Finance

Portfolio optimization, white labeling new investing products, risk management, manager selection, scenario analysis

>$100B Addressable Market Spend

In finance - just one of the potential applicable industries

EDS Operates High Margin SaaS Model

High ACV clients - all profitable

Tangible Benefits to Working With EDS

EDS analysis has made immediate improvements in 100% of cases

*Past performance is not a reliable indicator of future results, yearly performance breakout in the appendix

Completed 21 pilot projects

Appeal Across Geographies and Types

>3 years of institutional use of math and process Wide adoption by a $1.4T AUA firm

Financial Projections

Significant revenue growth expected over the next 2-3 years

Funds Raising

Ready to go-to-market product following 7 years of R&D

Examples

Finance
Big Data simulations
- Across any data-driven industry
- For risk management or forward projections

Click to learn more

Appendix

Case Study 1

Portfolio Optimization

Overview

EDS was given a sample portfolio by a UK pension fund. Since only the asset weights were known, EDS tool deducted the investors' preferences and proceeded to analyze the holdings

The following preferences were deducted:

Main focus was return
Fees and volatility were less critical

Solution Using Client Universe

Universe included c.40 funds

EDS is expected to outperform existing allocation:

Higher expected return

Higher Sharpe Ratio

Lower volatility

Opening to External Funds

Expand possible investments beyond existing funds
- Preference remains for approved client funds
Limit each fund to 20%
Focus on same preferences as the original portfolio

Results - Risk/Return

EDS tool reviewed 2,743 potential U.K. funds

Original portfolio allocation shows good asset selection
Broader universe allows for more targeted risk taking
The average mixed allocation fund expects a 6.1% annual return with 13.8% S.D.

Results Overview - Funds

EDS recommended the following holdings

Each fund is capped at 20%
8 additions to original portfolio
Full flexibility around which funds and how many to include

Results Overview

Significant projected improvement using EDS tool

Higher expected return
- With lower standard deviation
Lower management fees

Higher dividend yield

Client approved funds comprise 68% of the total

Every metric can be flexed and adjusted depending on individual preferences

Results Overview - Risk

Where do these gains come from?

Lower risk exposure across most metrics
Significantly improved factor risk exposure and risk distribution

Actual Results Since Recommendation

EDS recommendation delivered superior results

*Past performance is not a reliable indicator of future results

Case Study 2

Exposure to China vs. downside risk

Overview

Goal: Modify a 60-40 equity-fixed income portfolio to adjust risk

We show how the software iterates through portfolios and provides different options, depending on Client preferences

The Client had several simultaneous goals:

Increase exposure to China

Maintain all other factors relatively stable

We assume Chinese benchmark has 0 tail risk

Results - Key Takeaways

The analysis can be done in reverse as well:
- We tested by how much tail risk would rise
- With a less "generic" initial portfolio, we could do the opposite
If desired, EDS software can increase hedge to China
Exposure to China and tail risk are clearly related
Each solution represents the best trade offs given these parameters
Results were analyzed using monthly data going back to 2005

Results

Increasing exposure to China increase tail risk by 2.7%

List of Funds for 3 Select Portfolios

Portfolio 11 had the highest expected return and standard deviation

Number of funds or desired minimum/maximum fund weight can be modified

List of Funds for 3 Select Portfolios

Portfolio 7 had the highest expected Sharpe Ratio

List of Funds for 3 Select Portfolios

Portfolio 1 had the highest exposure to China

Recommendations

Each portfolio represents optimal solution in its own right
The "best" portfolio depends entirely on client preferences
EDS believes that maximizing Sharpe Ratio is preferable, so would recommend portfolio #7

EDS advice based on the data:

info@EconomicDataSciences.com

EconomicDataSciences.ai

Table of Contents

Founders & Our Story

Revolutionizing Decision Making

Arising from inability to incorporate all inputs, simultaneously

EDS's success will enhance the business process across financial services -- leading to improved, personalized outcomes

EDS Software Solution - First of its Kind

EDS developed the first software to solve these problems

EDS A.I. Implementation

EDS A.I. Implementation

On The Shoulders Of Giants

EDS Tech - Best Possible Mix

Cutting edge technology with focus on ease of interpretation

Where EDS Differs

EDS improves results across dozens of metrics at the same time

The EDS Infrastructure

The EDS Infrastructure - Big Picture

Seamlessly combine physical & cloud resources which can be dynamically managed

EDS Technology Stack

Principals

EDS infrastructure design is driven by 6 key principles

Principals (cont)

These principals represent a revolution in solution design

The EDS Infrastructure - Components

Each component of the technology stack leads towards our infrastructure principals and a more effective solution

The EDS Infrastructure - Security

Always at the top of our list

EDS Infrastructure - Summary

These features make possible real advances 'on the ground'

Current Industry Focus: Finance

Portfolio optimization, white labeling new investing products, risk management, manager selection, scenario analysis

>$100B Addressable Market Spend

In finance - just one of the potential applicable industries

EDS Operates High Margin SaaS Model

High ACV clients - all profitable

Tangible Benefits to Working With EDS

EDS analysis has made immediate improvements in 100% of cases

Appeal Across Geographies and Types

>3 years of institutional use of math and process Wide adoption by a $1.4T AUA firm

Financial Projections

Significant revenue growth expected over the next 2-3 years

Funds Raising

Ready to go-to-market product following 7 years of R&D

Examples

Finance

Big Data simulations

Appendix

Case Study 1

Portfolio Optimization

Overview

Solution Using Client Universe

Universe included c.40 funds

Opening to External Funds

Results - Risk/Return

EDS tool reviewed 2,743 potential U.K. funds

Results Overview - Funds

EDS recommended the following holdings

Results Overview

Significant projected improvement using EDS tool

Results Overview - Risk

Where do these gains come from?

Actual Results Since Recommendation

EDS recommendation delivered superior results

Case Study 2

Exposure to China vs. downside risk

Overview

Goal: Modify a 60-40 equity-fixed income portfolio to adjust risk

Results - Key Takeaways

Results

Increasing exposure to China increase tail risk by 2.7%

List of Funds for 3 Select Portfolios

Portfolio 11 had the highest expected return and standard deviation

List of Funds for 3 Select Portfolios

Portfolio 7 had the highest expected Sharpe Ratio

List of Funds for 3 Select Portfolios

Portfolio 1 had the highest exposure to China

Recommendations

EDS advice based on the data:

FT March 2019

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