The Growth and Performance of Artificial Intelligence in Asset Management

Authors

• Shuang Chen, University of Melbourne - Department of FinanceFollow
• Clemens Sialm, University of Texas at Austin - McCombs School of Business; National Bureau of Economic Research (NBER)Follow
• David X Xu, Southern Methodist University (SMU) - Finance DepartmentFollow

Publication Date

2-1-2025

Abstract

We examine the growth and performance of AI-driven investing. Using investment advisers' regulatory disclosures, labor market data, and fund strategy descriptions, we document that AI-driven investing has grown steadily since the early 2010s and is concentrated among hedge funds. AI hedge funds outperformed non-AI hedge funds in the early years, but this outperformance declined over time, even among early adopters. Contrary to concerns about AI-driven strategy homogeneity, AI hedge funds exhibit lower return comovement than non-AI peers. Our findings highlight both the alpha generating potential and the limitations of AI as a source of investment performance.

Document Type

Article

Keywords

Artificial Intelligence, Asset Management, Investment Advisers, Hedge Funds

Disciplines

Finance

Source

SMU Cox: Finance (Topic)

Language

English