GPs using AI to inform investment decisions
Asset managers are increasing and deepening their use of artificial intelligence (AI), with almost one in ten (nine per cent) now using generative AI to inform their investment decisions.
According to a new report from XPS Group, 34 per cent of fund managers are using generative AI in their research process, while approximately 50 per cent are using it to enhance efficiency and reduce costs.
Meanwhile, Allvue’s latest General Partner (GP) Outlook Survey found that 82 per cent of private equity fund managers and venture funds have already adopted AI in some capacity.
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In the fourth quarter of 2023, 47 per cent of GPs told Allvue that they were using AI. This figure rose to 82 per cent in the fourth quarter of 2024.
However, despite growing use of the technology, 58 per cent of the GPs surveyed by Allvue said that they were only using AI minimally. Among these fund managers, the key barriers to broader application included regulatory and compliance issues (27 per cent), data quality concerns (26 per cent), and a lack of skilled personnel (19 per cent).
“The survey findings reveal an industry at a crossroads, where the potential of advanced technologies like AI and robust data solutions remains out of reach for many firms,” said Ivan Lantanision, chief product officer of Allvue.
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“As the market evolves, overcoming these challenges will be critical to maintaining a competitive edge. We look forward to empowering firms to excel in the year ahead.”
The XPS report noted that AI adoption is expected to expand rapidly in the near future, with between 20 and 30 per cent of respondents actively developing their capabilities across each of the areas surveyed.
The Allvue survey echoed this belief, with 54 per cent saying that AI could serve as a key competitive differentiator in their business. 31 per cent said that they would use AI to enhance operational efficiency, while 23 per cent said they would use it to improve their data management and reporting, and 18 per cent said they would use it to aid in their decision making.
Only nine per cent of GPs said that they see high costs as a significant challenge to AI adoption.
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