A joint Morgan Stanley and Oliver Wyman report finds that although over half of asset managers in India have introduced AI into their investment processes, just 8% report measurable improvements in investment returns, underscoring ongoing challenges in leveraging AI for alpha generation.
- 55% of Indian asset managers now use AI in investment processes.
- Only 8% noted measurable gains in investment returns from AI.
- AI adoption mainly improves efficiency and research insights.
What happened
Morgan Stanley and Oliver Wyman published a joint research report in September 2026 revealing that despite the widespread adoption of AI technology among Indian asset managers, only a small percentage have seen it translate into higher investment returns. The report is based on the Mercer 2026 AI in Asset Management Survey, which showed 55% of firms have integrated AI into at least one investment function while an additional 27% are exploring AI applications.
While AI technologies have been deployed predominantly to enhance operational efficiency and support research activities, their influence on core investment decisions such as portfolio construction and trade execution remains limited. Specifically, only 13% of firms incorporate AI into portfolio design, and just 7% use it in executing trades.
Why it matters
The findings highlight a significant gap between the enthusiasm for AI adoption in asset management and the actual financial benefits realized by investors. Even though AI tools improve data processing and provide deeper insights, these improvements have not yet consistently resulted in outperformance relative to market benchmarks.
This gap signals that while AI can optimize processes and reduce some costs, it does not automatically generate alpha or superior returns. With only 8% reporting tangible investment gains, fund managers face ongoing pressure to better integrate AI into decision-making frameworks to fully capitalize on the technology’s potential.
What to watch next
Industry observers will be closely monitoring whether AI can progress beyond operational enhancements and research support to directly impact investment outcomes. Future adoption trends may depend on advances in AI models capable of more sophisticated analysis and execution within portfolio management.
Additionally, Indian asset managers and their investors will be interested in emerging case studies or proof points demonstrating how AI-driven strategies can outperform traditional approaches over time. The challenge remains to transform productivity gains from AI into significant financial performance improvements.