Fund managers are gearing up to spend more on artificial intelligence for help making investment decisions, according to a new survey by consulting firm Greenwich Associates.
Fifty-six percent of institutional investors plan to increase the integration of AI into their investment process while 40 percent expect to boost AI spending, the firm found. Just 17 percent of those surveyed are now using artificial intelligence techniques, such as machine learning and natural language processing, to analyze news and data.
Greenwich expects new European regulation requiring banks and brokerage firms to unbundle their fees for research and trading to hasten the adoption of AI. The second phase of the Markets in Financial Instruments Directive, which took effect in January, will lead asset managers to scrutinize their research spend more thoroughly as AI options swell, the firm said.
“Traditional investment research is under threat thanks to the explosion of new data and the technology,” Richard Johnson, vice president of market structure and technology research at Greenwich, said in a statement about the study.
Greenwich polled 30 chief investment officers, portfolio managers and investment analysts across North America, Europe and Asia, asking how they expect research offerings to change over the next decade. The survey, commissioned by Thomson Reuters commissioned, was conducted between March and May.
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Investors see AI having the biggest impact on analyzing data, news, and content, according to the study. This opens up an opportunity for those offering artificial intelligence products.
“We expect active portfolio managers will also be looking less to the sell-side for their research with a greater reliance on internal research and vendors to supply the information and tools they need,” said Mahesh Narayan, global head of portfolio management and research at Thomson Reuters. “Investors will likely need to obtain more data and information to feed new AI and machine learning technology they invest in, including alternative data to identify new ways of finding alpha.”