While AI budgets across the fund management industry are growing at an extraordinary pace — with 63% of firms increasing AI spending by more than 50% in the past 12 months and not a single firm reporting a budget decrease — the industry is deeply divided about whether it is spending the right amount, according to new research from Clearwater Analytics.
One in four (25%) fund managers believe their organization is still not investing enough in AI. Yet 66% say they fear their firms are already over-investing.
"What our research reveals is an industry wrestling with how to get AI right. Increasing the budget is the easy part. The harder challenge is institutionalizing AI in a way that drives genuine alpha and operational excellence, rather than simply adding cost and complexity,” says Souvik Das, CTO at Clearwater Analytics. "When the infrastructure is right, AI doesn't just work, it compounds. It identifies data anomalies in real-time, reduces the manual burden on risk and operations teams, and frees people to focus on the high-value strategic work that actually moves the needle."
Key takeaways:
· The majority of fund managers (56%) began integrating AI 4-5 years ago, and a further 34% started their journey two to three years back. Only 9% have begun AI integration within the past year.
· 13% of fund managers report AI investment increased by over 100% in the past 12 months.
· 50% saw expenditure rise between 50-99%.
· Not a single firm reported a decrease in AI spending.
· Only 4% held budgets steady.
· 43% of managers now use AI for 25–49% of their investment decision-making; 10% rely on it for the majority of their investment calls.
· 38% apply AI to 25–49% of their risk processes; 8% use it for the majority of risk assessments.
· 34% integrate AI into 25–49% of operational decisions; 6% use AI for over half of their operational workflows.
