(Bloomberg) -- Hedge funds and asset managers are increasingly using artificial intelligence when investing in global credit markets, but the technology isn’t replacing human traders — at least for now, according to a survey by Barclays Plc.
While AI has moved beyond the experimental, ad-hoc phase among all investor types, it is primarily being used for research, securities screening and analysis, complementing rather than replacing human judgment, the survey found.
“Overall, AI is expected to reshape roles and workflows rather than materially reduce headcount in the near term,” strategists Zornitsa Todorova and Andrea Diaz Lafuente wrote in a Thursday note. “The dominant view is higher productivity with broadly stable headcount.”
Only 7% of the 410 buyside investors across North America, EMEA and Asia surveyed by Barclays last month expect meaningful reductions in staff. AI is primarily being used for research, accounting for 44% of responses among hedge funds and 52% for both asset owners and long-only asset managers, followed by modeling and risk analysis. So far, AI is acting primarily as support for investors, with securities screening accounting for 25% to 26% of responses for hedge funds and long-only managers, and 20% for asset owners, the survey shows.
AI’s penetration in trading and execution remain minimal, at least with 77% of hedge funds, 84% of long-only managers and 88% of asset owners saying AI plays a limited role. Its usage in portfolio construction remains relatively small across all groups, the strategists added.
Electronic and high-speed trading, innovations that already dominate equity markets, has slowly been reshaping debt markets in what has been called the “equitification of credit.”
Security and data privacy is the biggest constraint across all groups, reflecting the sensitivity of trading data, proprietary models and client information, according to Barclays. Other challenges holding back AI adoption include regulation, compliance and cultural resistance and consistent with more structured organizations.
The survey also found that hedge funds are outpacing their peers when it comes to AI adoption, with 72% of hedge funds using it daily, far greater than the 49% of long-only managers and 38% of asset managers.
“This gap reflects distinct operating models,” the strategists said. “Hedge funds run faster, higher-turnover strategies, where speed and information processing are critical to alpha. Asset owners, by contrast, have longer horizons and more structured processes, resulting in more gradual adoption. Long-only managers sit in between.”
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