Industry experts believe AI is reshaping investment strategies but remains a tool to complement human expertise rather than replace it.
AI in fund management
Brijesh Damodaran, Managing Partner at Auxano Capital, highlights how AIFs are leveraging AI to improve efficiency and decision-making.
“AI tools simplify investment tracking, provide real-time market updates, and offer performance analytics. This enables fund managers to make more informed decisions,” he said.
AI-powered data analysis helps fund managers monitor portfolios with greater accuracy, automate repetitive tasks, and identify investment trends more effectively.
Enhancing asset allocation and risk assessment
In asset allocation and risk assessment, AI processes large datasets, including earnings reports, financial statements, and market sentiment from news and social media.
“By identifying hidden patterns and correlations, AI helps AIFs assess risks more effectively and uncover market trends,” Damodaran noted.
AI’s ability to analyse vast amounts of unstructured data allows fund managers to evaluate prospective investments with deeper insights, reducing risks associated with volatility and market fluctuations.
AI in hedge funds
Hedge funds within the AIF segment are using AI for algorithmic trading and market predictions.
“AI-driven quantitative strategies analyze extensive financial data to identify trading signals and patterns that human analysts may overlook,” Damodaran explained.
By improving predictive accuracy, AI-driven strategies refine trading algorithms, enhancing investment outcomes.
The automation of trading strategies also enables hedge funds to respond swiftly to market changes and capitalise on emerging opportunities.
AI as an augmentation tool, not a replacement
While AI plays a critical role in modern fund management, it is unlikely to replace human fund managers entirely. “At this point, AI serves as a support tool rather than a replacement,” Damodaran emphasised. “AI enhances fund managers’ capabilities by providing data-driven insights and automating routine tasks, allowing them to focus on strategic decision-making.”
The human element remains crucial in interpreting AI-generated insights, understanding complex market dynamics, and making judgment-based investment decisions.
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