From AI Signals to Active Returns: A Portfolio Manager's Guide to Capturing Consistent Alpha

An alpha signal is only as good as the portfolio it powers. While backtest results are no guarantee of future returns, they can guide us in how best to implement a strategy and demonstrating that a signal survives the rigours of real-world portfolio construction is crucial.

Axyon AI and SimCorp have teamed up to show that the combination of cutting-edge AI-driven signals and world-class portfolio construction tools is greater than the sum of its parts. For Axyon AI, this means proving its signals translate into genuine market-beating portfolios; for SimCorp, it is an opportunity to demonstrate how its Axioma risk and optimisation tools can unlock alpha sources.

In this paper, together we demonstrate how an active manager may want to think about building such a strategy. We set out the methodology, validate the signals and then apply them with a practical framework a long-only asset manager might use.