In line with advances in computing technology, data analytics, and related fields, there is an increasing trend toward utilizing generative artificial intelligence, large language models, machine learning, artificial neural networks, artificial narrow intelligence, and similar tools, models, and systems generally referred to as “artificial intelligence” (collectively, “AI Tools”) as part of portfolio management, trading, portfolio risk management, and other applications in the investment management processes used by various market participants, including Bridgewater Associates, LP (“Bridgewater”).
Bridgewater utilizes AI Tools in connection with managing the Bridgewater AIA Labs Macro Strategy (the “Strategy”). Bridgewater’s artificial investment associate (“AIA”) utilizes AI Tools to generate the investment logic for the Bridgewater AIA Labs Macro Strategy that is implemented by the Strategy. Bridgewater will utilize one or more AI Tools directly for investment and asset allocation decisions after determining that such usage and oversight (and the risks associated with them) is consistent with its obligations to the Strategy. While AI Tools are increasingly used by certain market participants in quantitative or algorithmic trading, AI Tools will also be used to perform sophisticated fundamental analysis (which may include the use of textual analysis) and to optimize asset allocations in the Strategy’s investment portfolio. The outputs produced from AI Tools will inevitably contain a degree of inaccuracy and error—potentially materially so—and could otherwise be inadequate or flawed, which may diminish the effectiveness of such AI Tools. Many AI Tools (including AIA) are relatively recent developments and may be subject to one or more undetected errors, defects, or security vulnerabilities. Some errors, defects, and/or security vulnerabilities may be discovered, if at all, only after an AI Tool has been used by end customers, including Bridgewater, or after substantial operations in the marketplace, and could result in significant loss of revenues or assets, or material liabilities or sanctions.