Key Takeaways
- AI could lead to significant changes to how the asset management industry functions, portfolio managers say.
- Fund managers are already using AI tools for research and day-to-day decision-making.
- But a Morningstar survey reveals that widespread adoption in the industry is still a way off.
The active versus passive debate has long divided the asset management industry. Now rapid advances in artificial intelligence could soon break down the barriers between the two worlds, according to some industry leaders. On a day-to-day level, AI-enabled technology is already making the lives of money managers easier, they say, improving workflows and research capabilities.
Kurt Kara, head of global value equities at Danish asset manager Maj Invest, envisions a future where large index-like funds are managed actively by AI, bringing together the world of indexes and active management. This means fewer “humans in the loop,” with, for example, one manager controlling 100 active funds using AI. This will inevitably cause significant disruption to the industry, he says.
“That’s going to be a challenge […] a lot of fund managers will be out of a job,” he said at the Morningstar Global Insights event in Copenhagen.
How Fund Managers Are Using AI to Analyze Stocks
Some active asset managers are already adapting to the AI shift. Like large language models (LLMs), such as those popularized by OpenAI and Anthropic, financial models can draw on data to model probable investment outcomes and opportunities. Kara said the models have been “tremendously helpful” at uncovering new ideas and making forecasts on stock valuations.
For Maj Invest, it’s the natural next step. Since 2004, the Maj Invest Global Value Equities fund, comanaged by Kara, has applied an in-house quantitative model to direct fundamental research. The model screens the investment universe across key metrics such as profitability, return potential, balance-sheet quality, and valuation, before presenting a shortlist of roughly 100 names for further consideration by the team.
“We’ve always been extreme heavy users of compute. I’m refining the process rather than changing it,” Kara said of his new, AI-enabled process, which features a network of agents working under a central system to conduct stock analysis. “It’s like an individual working for you, and this individual can spawn subagents that can work for that individual.”
Nordic financial advisory firm Max Matthiessen also leverages AI for investment analysis. “Data analytics […] has become immensely more powerful. You can do more with fewer people. I think that’s a huge benefit,” said CEO Sebastian Siegl, speaking at a separate Morningstar panel event in Stockholm. But he added that AI-led investment decisions remain a long way off. “Open-ended questions like ’find me the most interesting stocks’—I don’t think we’re there yet.”
AI Adoption Is Still at an Early Stage
Research suggests that while AI is aiding the active fund management process, comprehensive adoption is far less advanced than industry rhetoric suggests. A recent Morningstar study of 3,200 rated strategies globally found that meaningful AI integration was concentrated among fewer than 20 firms—predominantly those with long-established quantitative or systematic infrastructure, like BlackRock, AQR, and Goldman Sachs.
For Kenneth Lamont, principal of manager research for EMEA, at Morningstar, the findings indicate that the talk and the reality of AI use are “somewhat detached.”
Can AI Deliver Better Returns for Investors?
Maggie Stafford, director of product management at Morningstar Indexes, says the latest wave of industry evolution is already here and visible in how managers approach their portfolio strategies.
“We’ll continue to see the move into passive and systematic and quantitative accelerated with what’s happening in AI. I think the leading firms will really be those that are able to leverage AI to double down on their core strengths,” Stafford says.
It may be too early to say if AI can deliver superior returns. Asked whether the tech had made him a better investor, Kara was unequivocal. “Absolutely. It makes you question the stocks you own and the stocks you would never look at,” he said. Others remain more cautious—at least for now. “It makes you more efficient, but I think, to some extent, we are a faster horse [rather] than a new breed in the way we use it at the moment,” said Max Matthiessen’s Siegl.
