AI
THEME: TECHNOLOGY
28 August 2020 Research Foundation

Artificial Intelligence in Asset Management

  1. Söhnke M. Bartram
  2. Jürgen Branke
  3. Mehrshad Motahari
Artificial Intelligence in Asset Management Read the Literature Review

Artificial intelligence (AI) has grown in presence in asset management and has revolutionized the sector in many ways. It has improved portfolio management, trading, and risk management practices by increasing efficiency, accuracy, and compliance. In particular, AI techniques help construct portfolios based on more accurate risk and return forecasts and more complex constraints. Trading algorithms use AI to devise novel trading signals and execute trades with lower transaction costs. AI also improves risk modeling and forecasting by generating insights from new data sources. Finally, robo-advisors owe a large part of their success to AI techniques. Yet the use of AI can also create new risks and challenges, such as those resulting from model opacity, complexity, and reliance on data integrity.

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