How AI is transforming asset management

[Music] wealth and asset management institutions are at the Forefront of adopting Innovative Technologies like gen AI tools nine out of 10 managers are currently using or planning to use AI in their investment processes according to consulting firm Mercer so the question no longer remains if but how are managers implementing AI capabilities into their everyday investment strategies and at least that's what our next guest says here to weigh in we've got railand Lambert who is is the Mercer Global Alternatives leader great to have you here in studio with us pleasure to be here Brad thank let's

talk about this I mean how much of a role can AI really play in some of those investment decisions and and the broader world of Finance if you will well it really depends on where managers are incorporating them into their process you know 5 10 years ago the focus was on data science and how can we mine the information we have to provide better maybe intelligence and Reporting but today AI has taken everything to a whole new level so you're seeing managers deploying it um with respect to sourcing and screening new investment opportunities you they

might have specific criteria that they're looking for say in the Middle Market certain segments of the economy um where they're using it in that regard but compellingly they're also use using it as they look across their portfolio and understanding the data that they collectively have and ownership how can they then connect the dots of that data and maybe even bring to Market new products and Solutions on behalf of clients I mean is this something that the the client the the client would engage directly with or something that managers would use and leverage as a tool

to say okay this is the investment decisions that we've made in the past this is the mix of your portfolio or the risk propensity can that you can add on or where you should perhaps mitigate some of the risk that you currently have in your portfolio right now like where is this this touch Point happening the touch point is happening on two places at least in the most simplest form right one is how the manager is integrating AI into their own investment decision- making into uh the data as I mentioned that they're sitting on how

they're utilizing that to um bring forth maybe new ideas across the portfolio the second big place so that managers are using it is is limited partners you know as investors in those manager funds we like a lot of data and we like it you know immediately so managers too are finding ways to integrate that technology into uh their data rooms into do how they're reporting information to their investors um and that's cutting down on the amount of time so they can provide more value at analytics on other you know aspects of portfolio consideration so it's

both within their own portfolios but also in their reporting and monitoring and updates to investors okay so what are the early returns that we've seen that are that are showing a difference between okay this is your portfolio without this layer of artificial intelligence and here's your portfolio performance with this layer added in I would say that we haven't seen it broken out that way yet um I think you know when you you you briefed uh you mentioned at the outset you know the 90% stat that we found with our AI study and you know while

that it's 90% overall roughly 40% of managers are still contemplating incorporating it into their processes so I think the real you know where we'll probably start seeing it show up is As companies you know we know distributions have been down and so the big Focus really now is on eida enhancement we how how can these managers add value to the eida of the companies because the longer if you were to sell that company at the same valuation one year later your return your rate of return is already down by 300 basis points so the focus

is on iida so that's where I think as we look at you know what value creation levers the managers have to add value to their portfolios we might say at one point AI as one of those levers how are they utilizing it to enhance productivity to enhance um um you know streamline processes to cut down on other costs of the business and so in that regard you know we'll see but we haven't seen that show up yet in terms of actual measurability I think it's still still early days just as long as AI does not

shame me about my trades that I'm making that that would just hurt add insult to injury on the portfolio performance basis thanks so much for taking the time appreciate it ra Lambert who is the Mercer Global alternative is leader