We evaluate the performance of artificial intelligence (AI)-powered mutual funds. We find that these funds do not outperform the market per se. However, a comparison shows that AI-powered funds significantly outperform their human-managed peer funds. We further show that the outperformance of AI funds is attributable to their lower transaction cost, superior stock-picking capability, and reduced behavioral biases.
Chen, Rui and Ren, Jinjuan, Do AI-Powered Mutual Funds Perform Better? (November 3, 2021). Finance Research Letters, Forthcoming, Available at SSRN: https://ssrn.com/abstract=3979738
