The Growth and Performance of Artificial Intelligence in Asset Management

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.

Keywords: Artificial Intelligence, Asset Management, Investment Advisers, Hedge Funds

Suggested Citation: Suggested Citation

Chen, Shuang and Sialm, Clemens and Xu, David, The Growth and Performance of Artificial Intelligence in Asset Management (February 01, 2025). SMU Cox School of Business Research Paper No. 25-30, Available at SSRN: https://ssrn.com/abstract=5638612 or http://dx.doi.org/10.2139/ssrn.5638612