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The irony of investors’ piling into AI is that the technology has for years struggled to crack the actual business of investing. Machines get bamboozled by noisy markets and can be caught off guard by fickle trends, and finance—surprisingly—sometimes lacks the oceans of data that underpin the technology in other domains.
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That hints at one of the last and biggest hurdles to AI adoption: explainability. It turns out human investors generally like to know what’s happening with their money. If an AI strategy underperforms and the fund manager can’t explain why—because the machine’s thinking is unknown—it doesn’t go down well. “It’s natural,” Kharitonov says. “Nobody’s asking ChatGPT to explain why it uses certain words.”
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