AI-powered investments: how AI/ML is improving returns in the investment industry

Early efforts to apply AI to investing have proven to be largely successful. A recent report by Eurekahedge noted that their AI/Machine Learning Hedge Fund Index had outperformed their overall Hedge Fund Index by nearly 200bps per annum over the past five years (annualized returns of 7.35 percent vs 5.51 percent). Institutional Investor Alpha's annual list of the highest-earning hedge fund managers also bears this out, as the majority of the managers in the top 10 (such as Bridgewater Associates, Citadel, the D.E. Shaw Group, Millennium Management, etc.) are known to incorporate AI into their investment processes.