JPMorgan AI agents beat traditional investment portfolios in historical simulations

JPMorgan AI Agents Beat Traditional Investment Portfolios in Historical Simulations | PYMNTS.com

The bank's strategists led by Thomas Salopek shared the results in a Thursday (July 9) note, cautioning that the results are based on historical simulations and should not be seen as proof that AI can consistently outperform markets, according to the report. This is JPMorgan's first attempt to build an AI agent that can identify market regimes, the report said. "We are enthusiastic about the possibilities of agentic AI, even as we are wary to hand off asset allocation decision-making to an agent," the strategists wrote, per the report. The PYMNTS Intelligence report "Financial Services Pulls Ahead in the Enterprise AI Race" found that financial services and insurance firms are going all in on AI, scaling the technology across more tasks than many other enterprise sectors. The tasks in which the financial services sector has embedded AI include revenue recognition, credit scoring and sales forecasting, according to the report. "These are environments where outcomes can be verified, defended to regulators and traced back through clean data pipelines," the report said. "AI thrives here precisely because the rules are known. These are also, notably, tasks oriented toward protecting what a firm already has: its books, credit exposure and revenue pipeline." Coinbase announced in June that the users of its exchange can now connect their AI agent to their account so the agent can trade, pay and execute workflows on their behalf. The new Coinbase for Agents facilitates these connections and enables agents to get full context about the user's financial life and act on the user's behalf. Robinhood announced in May that its customers can now turn some of their activity over to AI agents. This capability resulted from the company's launch of its Agentic Trading and the Agentic Credit Card, which allows AI agents to make trades and credit card purchases on a customer's behalf.

JPMorgan AI agents beat 60/40 portfolio in tests - Bloomberg By Investing.com

Investing.com - JPMorgan Chase (NYSE:JPM) shares gained 0.4% Friday after Bloomberg reported Thursday evening on a note from the bank disclosing that AI-powered investing agents outperformed a traditional 60/40 portfolio in historical simulations. Researchers at the bank built AI agents that shift between stocks and bonds based on changing market conditions. In backtests spanning the past two decades, the best-performing system topped a 60/40 portfolio by 0.7 percentage point annually with lower volatility, while also beating JPMorgan's own rules-based market regime model, according to Bloomberg, citing strategists led by Thomas Salopek. The results are based on historical simulations rather than live investing. JPMorgan warns against treating them as proof that AI can consistently outperform markets. "The AI agent can be set up with a process to be empowered to make decisions under uncertainty, producing outperformance vs a reasonable benchmark," the strategists reportedly wrote Thursday, describing the work as the firm's first attempt to build an AI system for identifying market regimes. The strategists acknowledged risks associated with widespread AI adoption in investing. "We strongly caution against uncritically accepting what amounts to in-sample, overly confident answers of AI," they wrote. "Agentic AI needs to be grounded in a well thought-out asset allocation process, rather than naively assuming the agent can be the source of the domain knowledge." Banks have spent the past two years embedding large language models into research, coding and internal investing tools. They are now testing whether those systems can make capital allocation decisions across markets. This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.