Artificial intelligence (AI) is rapidly transforming industries across the globe, and investment management is no exception. As fund managers navigate increasingly complex markets, AI has emerged as a powerful tool to enhance decision-making, improve efficiency, and uncover new opportunities. From analysing vast datasets to optimising portfolio strategies, AI is reshaping the way managers approach investment processes.
AI is no longer a futuristic concept; it is a present-day reality that is revolutionising the investment industry. Managers who oversee trillions of dollars across multiple asset classes – both public and private – are increasingly integrating AI into their workflows. The benefits include aspects such as:
- Enhanced efficiency: AI automates routine tasks, such as data extraction and document analysis, allowing managers to focus on higher-value activities.
- Improved decision-making: AI models can analyse market trends, forecast risks, and identify investment opportunities with greater accuracy than traditional methods.
- Scalability: AI solutions can be applied across diverse asset classes and geographies, making them valuable for global investment strategies.
- Risk mitigation: By linking external and internal data, AI may be able to provide a comprehensive view of risks, enabling better-informed decisions.
Frontier has over three decades of experience in researching and rating investment managers and we complete over 1,000 manager meetings a year across multiple asset classes both in Australia and overseas. Understanding how fund managers are utilising AI, integrating it into their processes, and planning for its future applications is critical for Frontier and in turn for our clients. To provide a perspective from how investment managers see their own progress in this space, we have surveyed managers from across the globe not just to gain insight into their practices but to also develop the Frontier AI Index, to provide an ongoing report into how the industry is evolving over time in a peer relative sense.
Our survey received over 210 responses from Australia and overseas and covering every asset class we research. The assets represented by all these managers/strategies runs into the trillions of dollars – well more than the entire Australian institutional investment market. The survey allows us to understand trends and gain a clearer picture of how AI is being used across asset classes and geographies; identify leaders to learn from those at the forefront of AI adoption; drive innovation by showcasing the importance of AI and encourage its adoption; and to build a benchmark that tracks AI adoption over time, providing valuable insights.
In addition to the quantitative insights we gained from the selection of responses to questions, we also gained considerable insight from open ended responses we received from managers. We are extremely grateful to the managers who responded so willingly and honestly. The survey was not anonymous, but we publish the results in aggregate to be respectful of the trust managers have given us in providing insights into their developing journey.
Frontier’s initiative to assess AI adoption provides valuable insights into the state of the industry, highlighting both the progress made and the challenges that remain. By creating a recurring benchmark, such as the Frontier AI Index, we aim to track the evolution of AI adoption over time and provide actionable insights for managers and stakeholders.
The importance of continuing to monitor and assess the use of AI in investment management cannot be overstated. As AI technologies continue to evolve, they will play an increasingly critical role in shaping the future of the industry. By staying informed and proactive, managers can leverage AI to deliver better outcomes for their clients and maintain a competitive edge in a rapidly changing landscape.
