In this episode of Conversations with Frank Fabozzi, CFA, Francesco Fabozzi explores how large language models are transforming investment workflows, from discretionary research and quantitative strategies to portfolio construction and governance. He discusses where AI creates value, the risks firms must manage, and why the future of investing will depend on combining domain expertise with AI-driven insights.
Key Discussion Points
AI beyond automation: Why discretionary investors may benefit more than large systematic firms
From sentiment to return prediction: How language models extract investment signals from unstructured data
AI in quantitative investing: Creating new predictive factors and enhancing research efficiency
Model risk and governance: Managing hallucinations, evaluation frameworks, and AI oversight
The next frontier—portfolio construction: Moving beyond stock selection toward AI-informed portfolio decisions
Building differentiated investment processes: Why domain expertise, proprietary knowledge, and investment philosophy still matter in an AI-driven world
