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Notices
Industry Future
THEME: INDUSTRY FUTURE
29 July 2025 Financial Analysts Journal Volume 81, Issue 4

The Disappearing Edge: AI, Machine Learning, and the Future of the Discretionary Portfolio Manager

Frank J. Fabozzi, CFA, Andrew Chin, Igor Yelnik, and Jim Kyung-Soo Liew

As AI transforms asset management, portfolio managers are evolving from decision-makers to stewards of machine-driven models. This article explores how firms can adapt talent, governance, and workflows to thrive in an AI-enhanced investment era.

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Abstract

The discretionary portfolio manager’s role is evolving as artificial intelligence and machine learning increasingly supplement or replace traditional investment insight. This article explores how advances in large language models and deep learning are narrowing the discretionary edge once defined by judgment and narrative skill. A new model is emerging in which the portfolio manager acts as an allocator and model steward, rather than a sole decision-maker. We examine the implications for governance, performance, and risk and argue that firms that retool talent, workflows, and oversight may be best positioned to harness the promise — and manage the limits — of AI-driven asset management.