A new report published by Mercer has revealed that 91 per cent of investment managers across its Global Investment Manager Database are currently using (54 per cent) or planning to use (37 per cent) AI within their investment strategy or asset class research.
Mercer found that managers’ use of AI across investment research and alpha generation is largely focused on augmenting existing capabilities through the expansion of data sets and analysis, and idea generation.
Conversely, only a minority of managers are deploying AI in more complex aspects of portfolio management.
Mercer also explored managers’ expectations around the potential impacts of AI on value creation at the asset class level, revealing that they “vary widely”.
Namely, among those already using AI, the firm said there is a clear consensus on the opportunity set in equities, with 61 per cent of managers seeing very significant or significant prospects for value creation.
This is followed by hedge funds at 53 per cent and digital assets at 45 per cent.
Moreover, nearly half of managers (47 per cent) see a significant or very significant prospective value creation opportunity in fixed income.
“In the fixed income arena, AI may be used to support ‘bottom up’ credit analysis of corporate bond issuers, similar to how it would be deployed to support and expand equity analysis,” said Noel Collins, senior director of fixed income investment research at Mercer.
From a top-down perspective, he said, AI may be used to improve macro and geopolitical analysis and therefore help with portfolio positioning and risk assessments.
“Although AI capabilities are not yet the norm for fixed income managers, we are incorporating this focus to an increasing extent in our own research,” Collins said.
At the sector level, however, the research revealed that managers see significant or very significant value creation opportunities through the integration of AI across a range of sectors/business lines.
Among those already using AI, the technology sector naturally emerges as the most prominent opportunity, viewed as significant or very significant by 83 per cent of managers. Healthcare (72 per cent); financial services and wealth management (70 per cent); legal services (66 per cent); banking (64 per cent); and insurance (61 per cent) are the next-most-cited significant or very significant areas of opportunity for value creation.
Exploring the future impact of AI on markets and strategy development, Mercer revealed that at a macro level, managers are “bullish” about AI’s potential to contribute to global economic growth over the coming years.
Namely, on average, managers currently using AI expect a US$14 trillion boost to the global economy by 2030, and a 9 per cent increase in global GDP over the same period.
Moreover, some 56 per cent of managers expect AI to contribute to disinflationary forces in the economy, through productivity, automation, and competition impacts driven by more widespread integration.
