Building Smarter Portfolios: AI vs. Traditional Asset Allocation
Building Smarter Portfolios: AI vs. Traditional Asset Allocation Introduction The landscape of investment management is rapidly evolving. Traditional asset allocation models—once the gold standard—are increasingly being challenged by advanced artificial intelligence (AI) systems that promise not just efficiency but smarter, real-time decisions. This seismic shift is prompting investors, both institutional and retail, to ask a critical question: Can AI truly outperform traditional asset allocation models? In this in-depth exploration, we compare the legacy frameworks of Modern Portfolio Theory (MPT) and strategic asset allocation with the dynamic capabilities of AI-driven systems. Drawing on real-world use cases from KGN AI , we highlight how AI is helping build optimized portfolios across stocks, forex, and cryptocurrencies using machine learning, reinforcement learning, and data intelligence. Part I: Traditional Asset Allocation—An Overview Before delving into AI, it’s im...