The Adoption of Artificial Intelligence in Swedish Funds

Abstract

Fund managers have historically made use of traditional portfolio strategies such as Markowitz portfolio selection, as part of their decision making. But as the world has started to shift towards a more automated lifestyle, the question arises if fund management will follow. The aim of the thesis was to investigate if Swedish funds adopt artificial intelligence as part of their decision making. Five interviews with fund managers were conducted through mail and phone interviews. In order to evaluate whether artificial intelligence is efficient in asset management, a comparison between funds that utilizes artificial intelligence and their benchmark index, together with the Sharpe ratio, have been made which looked specifically into the latest recession. The final findings from the thesis were that funds do in fact try to incorporate artificial intelligence into asset management. Some of the funds are in the early developing stages but many funds lack the competence and investment to develop or buy necessary tools. It was also shown that most funds that are managed partly or fully by artificial intelligence yielded a higher return during the 2020 corona pandemic, compared to their benchmark index. But when taking the risk into account with the Sharpe ratio, only half of them had a small but positive Sharpe ratio.