As artificial intelligence (AI) becomes more prevalent across many industries, more experts are delving deeper into the possibilities of AI in the world of investing.

James Allison, head of private wealth analytics at Schroders, says that for private asset investors, the true potential of AI is just beginning to unfold.

“For some industries, the immediate impact of AI will be enormous. Moreover, for some companies, AI is already completely changing the way they work. In most other industries, including private market investing, we believe nearly all professionals will see productivity gains over the next 6 months. However, AI will not completely revolutionize what is already happening,” Ellison said.

How will AI be used by private investors?

“Private investors are faced with a wealth of information: general partner (GP) reports, company filings, industry documents, news articles and market analytics. The massive search for this unstructured information facilitated by LLMs allows investors to cut through the noise and focus on the most important pieces of information,” Ellison explained.

According to Ellison, the organizations that can lead tomorrow’s market are those that can master the engineering challenges of integrating underlying models with internal data. This will allow staff to be quickly trained and prepared to use AI to improve productivity.


Limitations and problems

While AI has the potential to revolutionize private market investing, it’s important to recognize that there are risks associated with its use, Ellison warned.

According to him, there are three broad categories of tasks that are not suitable for AI and require human presence to make key decisions:

  • Critical thinking;
  • Conflict resolution;
  • Broad understanding of context.