Do AI-Powered Mutual Funds Perform Better?
22 Pages Posted: 14 Dec 2021
Date Written: November 3, 2021
We evaluate the performance of artificial intelligence (AI)-powered mutual funds. We find that these funds do not outperform the market per se. However, a comparison shows that AI-powered funds significantly outperform their human-managed peer funds. We further show that the outperformance of AI funds is attributable to their lower transaction cost, superior stock-picking capability, and reduced behavioral biases.
Keywords: Artificial Intelligence; Mutual fund performance; Behavioral biases
JEL Classification: G11, G23, G41
Suggested Citation: Suggested Citation
Chen, Rui and Ren, Jinjuan, Do AI-Powered Mutual Funds Perform Better? (November 3, 2021). Finance Research Letters, Forthcoming, Available at SSRN: https://ssrn.com/abstract=3979738
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