Malvern-based Vanguard Group has been quietly utilizing artificial intelligence across four of its factor-based funds with a combined $13 billion under management for around a year, writes Justina Lee for WealthManagement.com.

The world’s second-largest asset manager, which is known for its old-school investment ethos and propensity to not go after newfangled technologies. These include crypto, added machine learning to several active stock funds in hopes that its linguistic and data-analysis capabilities will assist in adapting systematic strategies to changing economic and market conditions.

“What we want to do here is represent the process that we believe in, which is a fundamentally driven quant process,” said Scott Rodemer, head of factor-based strategies at Vanguard. “With this kind of multitude of effects that could impact a stock, it lends itself quite naturally to a machine-learning process.”

The initial results of the use of AI are encouraging. The $7.8 billion Vanguard Strategic Equity Fund managed to beat both its benchmark and most peers last year. The same is true for the $1.5 billion Vanguard Strategic Small-Cap Equity Fund. Meanwhile, the $491 million Vanguard Market Neutral Fund also outperformed similar products with a 12 percent return.

Read more about Vanguard utilizing artificial intelligence at WealthManagement.com.

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