Hedge funds are rapidly adopting artificial intelligence, and are not scared of letting their staff loose with new tools.
Some 86% of hedge funds have allowed their staff to use some form of generative AI, according to a report from the Alternative Investment Management Association.
Research, technology, compliance, and investor relations are the key areas likely to be “significantly disrupted” by AI, the report, which covered 157 hedge fund managers overseeing $783bn in assets, added.
READ Hedge funds are jumping on the ChatGPT bandwagon — here’s what you need to know
ChatGPT, an AI-powered language model, shot to fame after launching in November 2022. Amid growing adoption, leading financial institutions such as Bank of America, Citi, and Goldman Sachs banned their employees from using the tool, Bloombergreported.
The latest AIMA research suggests hedge funds have adopted a different approach to such banking giants.
Hedge funds are not only allowing staff to use AI tools; they want their future employees to have skills in innovative technologies.
Around a third of firms said it is important for upcoming hires to have experience using AI tools, and 11% of hedge funds said they already have at least one in-house AI specialist.
While hedge funds are still mainly using tools like ChatGPT to summarise documents and conduct research, 20% believe the technology will have a significant impact on portfolio management.
READ Hedge fund Bridgewater offers $21,000 a month to interns
The potential impact of AI on investment decision-making could change the face of the hedge fund industry, which offers as much as $120m to attract top portfolio managers to make the right calls.
Despite growing adoption, hedge funds have faced challenges in training their staff on AI. Only 15% of hedge funds with assets under management over $1bn have been able to train their employees on the usage of AI tools, AIMA’s report said, citing data security, privacy and so-called ‘hallucination’ — where technology invents results — as some of the top barriers to adoption.
To contact the author of this story with feedback or news, email Bilal Jafar
