For Fund Managers, AI Help Is At Hand

Many fund houses are using AI to crunch data, while leaving decision-making with the fund manager. To keep matters safe, Sebi guidelines mandate data confidentiality and compliance, and to keep investors informed

- Kundan Kishore

When it comes to choosing a mutual fund (MF) scheme, one of the major parameters is the expertise and legacy of fund managers, a living, breathing human being you can trust your money with. For decades, fund managers have been relying on their team of research analysts, gut instincts, and market expertise to make investment calls. But, of late, AI is bringing about a change, with its capabilities of precise processing of millions of data points, which are multiplying as markets become more dynamic and globalised.

But what does this entail for the future of human fund managers? Before exploring that question, let's look at the extent to which AI has made inroads in the mutual fund industry and how much of the fund management workload it's sharing.

Inroads In MF Industry

The MF industry has started embracing AI, but in a measured way, treating it more as a helping hand. The objective: to create wealth with speed, accuracy, and confidence. According to Mercer's global survey, AI Integration In Investment Management 2024, 9 out of 10 managers are either currently using (54 per cent) or are planning to use (37 per cent) AI for their investment strategies or asset-class research.

India is not far behind its global counterparts in adopting AI. When we checked with fund managers from about 20 fund houses whether they use AI in their investment management process, most acknowledged they do, at least to some extent. Among the top 10 fund houses, the majority admitted to using AI in their investment process at some level. Among major fund houses, Aditya Birla Sun Life Mutual Fund and Nippon India Mutual Fund said they do not use any form of AI in their investment process. Aditya Birla Sun Life Mutual Fund, however, said that they are in the process of learning and experimenting with AI tools.