Artificial Intelligence in Asset Management

Söhnke Bartram, Branke, Jürgen and Mehrshad Motahari

No 14525, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: Artificial intelligence (AI) has a growing presence in asset management and has revolutionized the sector in many ways. It has improved portfolio management, trading, and risk management practices by increasing efficiency, accuracy, and compliance. In particular, AI techniques help construct portfolios based on more accurate risk and returns forecasts and under more complex constraints. Trading algorithms utilize AI to devise novel trading signals and execute trades with lower transaction costs, and AI improves risk modelling and forecasting by generating insights from new sources of data. Finally, robo-advisors owe a large part of their success to AI techniques. At the same time, the use of AI can create new risks and challenges, for instance as a result of model opacity, complexity, and reliance on data integrity.

Keywords: Algorithmic trading; Machine learning; Lasso; Neural networks; Deep learning; Decision trees; Random forests; Svm; Evolutionary algorithms; Nlp (search for similar items in EconPapers)
JEL-codes: G11 G17 (search for similar items in EconPapers)
Date: 2020-03
New Economics Papers: this item is included in nep-big, nep-cmp, nep-fmk, nep-ore and nep-rmg
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Citations: View citations in EconPapers (7)

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Working Paper: Artificial intelligence in asset management (2020)
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