Global Dynamo Software Survey Reveals AI Sentiment and Adoption Trends Among General and Limited Partners in Alternative Investments
Dynamo Software has released new global survey data shedding light on the alternative investment (ALTS) community’s engagement with artificial intelligence (AI). With over half of General Partners (GPs) and Limited Partners (LPs) surveyed reporting active use of AI for predictive intelligence, the findings highlight the experiences of early AI adopters and investors. Titled An Inside Look at AI Trends & Future Plans with the Private Investment Community, the report examines two main areas of AI integration:
- Investment in AI-focused companies and funds
- Incorporation of AI in firms’ internal workflows
The report also captures GP and LP sentiment on AI’s potential to shape strategy, job roles, and competitive advantage in the industry.
Investment in AI-Focused Companies and Funds
The survey reveals that 75% of LPs intend to increase allocations to AI investments over the next year. Sectors like cybersecurity (56%), predictive analytics (55%), and data centers (54%) lead in attracting interest. Meanwhile, autonomous vehicles and computer vision technologies are on the lower end, with each appealing to only 14% of respondents.
When considering investments in funds that leverage AI, LPs place high importance on a proven track record and transparency, factors influencing 55% of respondents. Risk management ranks next (47%), while expertise and experience are of lesser importance (27%), likely due to AI’s relatively recent entry into the ALTS domain.
Interest in AI-driven funds is growing rapidly, with 72% of LPs planning to increase their allocations within the next six months (32%) or even sooner (40%). Among these, 37% expect this increase to be significant.
AI Integration in Workflow
Most GPs and LPs (60%) describe their firm’s AI strategy as being in the early exploration stages, though 27% report more active engagement, with 20% using AI in regular workflows and 7% implementing it extensively.
For those employing predictive AI to forecast market trends and investment results, its application remains narrow, with only 11% using it for targeted markets and 6% for specific use cases.
Respondents have generally reported positive impacts on portfolio performance, with nearly half (47%) observing performance improvements and 30% noting no impact. Notably, none reported negative effects.
“With almost half of investors seeing performance gains from AI, it’s evident that AI is becoming a transformative force in the investment world,” said Dynamo CEO Hank Boughner. “While we’re only scratching the surface of AI’s potential, the industry’s openness to using AI for investment optimization is promising.”
Current AI Use Cases in Alternative Investments
GPs currently employ AI primarily for portfolio monitoring (35%), valuation (32%), deal origination and analysis (29%), document management (29%), and security analysis (29%).
LPs focus on using AI for automating data extraction and collection, with nearly 40% already engaged in these processes and another 14% planning to adopt this capability within six months. Some GPs express concern (10% very concerned, 26% somewhat concerned) about how LPs’ AI-driven data handling might impact their interactions. Still, 64% remain neutral or unconcerned.
Outlook for AI and Jobs in ALTS
The survey suggests a shift in the talent landscape, with over half of GPs and LPs expecting AI to displace some jobs in the ALTS sector within the next five years.
The Future of AI
At the current moment, the GPs and LPs that participated in Dynamo’s survey largely believe AI to be only moderately disruptive to traditional investment strategies. At the same time, 74% of participants believe the technology will be at least important (39%) if not very (28%) or highly (7%) important for maintaining a competitive advantage in ALTS.
According to Boughner, because the field of AI is advancing rapidly, Dynamo intends to repeat the survey of AI deployment and perception annually to spot trends, consult with GP and LP clients and inform its own product roadmap. The 2024 AI survey is available for complimentary download now.
About Dynamo’s Frontline Insight Reports
Published quarterly, Dynamo’s Frontline Insight Reports contain primary research obtained through online surveys of targeted alternative investor audiences. The survey results are contextualized by Dynamo subject matter experts in formal Frontline research reports. To date, Dynamo’s research team has focused on delivering noteworthy insights related to the attitudes, predictions, and strategic plans that Limited Partners (LPs), General Partners (GPs), Hedge Funds, and Emerging Managers have on a number of alternative investment topics.
About Dynamo Software, Inc.
Dynamo gives alternatives investors a Performance Edge, empowering them to efficiently scale their firm to capitalize on the growing wave of private market opportunities. With the Dynamo Alternative Investment Platform, Limited and General Partners can now run a tightly integrated firm, putting all their data to work to accelerate operations across front, middle, and back office, unleashing teams to work smarter, and allowing leaders to make better investment decisions and scale their firm. Dynamo has a global footprint with operations across North America, EMEA, APAC, and UAE.
