Almost the entire hedge fund industry is now using generative AI in their day-to-day work, with deployment rising sharply in the front office.
A new survey from AIMA has found that 95% of fund managers are using gen AI, up from 86% in 2023, while 58% expect increased use in alpha generation — up from 20% in 2023.
LPs are driving the change: 60% of institutional investors would be more likely to invest in a hedge fund that allocates a meaningful portion of its budget to gen AI research and implementation.
The sector’s gen AI use cases initially focused on administrative tasks and efficiency gains but are now broadening to a range of business functions, including the front office.
The larger funds are more likely to use gen AI for a range of use cases and also to have more robust governance policies in place.
Firms are looking to bring in more AI specialists to boost their expertise in the technology, led by multi-strategy managers running more than $1bn.
“Gen AI is reshaping the operating model of alternative investment firms,” said Tom Kehoe, global head of research and communications at AIMA.
“The firms that will stand out are those pairing credible investment in capabilities with clear governance and human oversight. Investors are rewarding evidence over rhetoric.”
The research is based on a worldwide survey of 150 fund managers, representing an estimated $788bn in AuM, alongside 18 of the world’s largest institutional investors that allocate to alternative investments.
Access the report, “Charting the course: Lessons from AI leaders in alternative investments,” here