Artificial intelligence (AI) is transforming industries worldwide, and asset management is no exception. While many financial institutions have recently started exploring AI-driven investment strategies, Smart Wealth has been refining its AI capabilities for over two decades.
This pioneering approach has led to exceptional performance, including an 11% risk-adjusted return in 2024, outpacing titans like BlackRock, Goldman Sachs, and JP Morgan.
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Miro Mitev, CEO and Founder of Smart Wealth, believes AI is reshaping asset management and that AI-driven investing can align with ethical and social goals.
Performance and Strategy: AI as the Ultimate Asset Manager
Achieving an 11% risk-adjusted return in 2024, outperforming some of the biggest names in finance, is no small feat. According to Mitev, Smart Wealth’s success lies in its fully AI-driven investment model.
“One of our investors said to us that we are delivering alternative returns on core assets,” Mitev explains.
“The key is our AI-driven approach. Our model is built on removing human biases and limitations from the decision-making process of investments. By leveraging advanced algorithms and analysing over 60,000 data points per second, our AI model is able to identify patterns that even the smartest human minds can’t, using them to make evidence-based decisions. With our AI-driven investment approach, we have consistently delivered superior returns for any given level of risk for over twenty years.”
While many asset managers incorporate AI-driven signals into their strategies, Smart Wealth takes AI integration to another level.
“Although many asset managers use AI signals, or recommendations, to help inform their investment decisions, we differentiate ourselves by committing to the technology fully,” Mitev says.
“We set the macro rules and then any human intervention ends. Our AI removes human emotional biases from the investment process, and we have proven many times over that it makes better decisions than human asset managers. Therefore, we treat the AI as our CIO, setting the borders for the AI, such as setting the max weight to a single eligible asset and asset class, then allowing the AI to fully take the reins.”
This approach treats AI as the Chief Investment Officer (CIO), with its decisions determining the firm’s asset allocation. Human involvement is limited to setting broad parameters—such as the maximum weight of an asset class—before the AI takes full control.
AI’s role in the Future of Asset Management
Smart Wealth’s journey in AI-powered asset management began long before most firms even considered AI a viable tool.
“This journey began at Siemens when our team pioneered a groundbreaking approach to asset management by launching the world’s first financial product based on artificial intelligence in cooperation with leading financial institutions,” Mitev says.
With over 20 years of refining and optimising AI-driven investment models, Smart Wealth has built a competitive edge that newer AI adopters struggle to match.
“With our AI operating as a continuously learning model, early adoption provides a significant advantage. It has evolved through multiple cycles, and we have gained the experience of how to optimise the context it works in. Whilst we acknowledge that no system can be completely error-free, our AI leverages its past mistakes to improve and refine its decision-making processes. With over two decades of experience in asset management, the model consistently delivers market outperformance.”
Future of AI in asset management
Mitev predicts dramatic expansion in AI adoption over the next five years but highlights challenges that traditional firms will face in fully integrating AI.
“However, we do recognise the challenges that larger institutions face in fully embracing AI,” he explains. “Current remuneration and client fee models in these companies are built around human teams, with investment decision-makers often regarded as central to the success of wealth management teams globally. This traditional structure makes it more difficult for these larger, more established organisations to quickly adopt these new technologies that are required to stay ahead and competitive in the industry.”
At Smart Wealth, AI is the foundation of operations rather than an add-on, allowing the company to remain agile and competitive. Mitev believes that as AI takes on more decision-making roles, industry dynamics will shift, potentially leaving traditional firms struggling to keep up.
Competing with Industry Giants and Managing Risk
Consistently beating major asset managers is an impressive achievement, but Mitev remains focused on continued innovation.
“We are proud of our consistent outperformance, but we know that there is still so much left to do, to learn, and to deliver. Perhaps the most interesting aspect is that there is so much potential to match volatility and return for investors. We use AI to develop investment strategies precisely attuned to investor needs and preferences.”
His advice for firms looking to stay ahead? Embrace emerging technologies early.
“If I was to offer advice to other firms, it would be to focus on complementing, not competing with emerging technologies. Embracing innovation at an early stage is also vital, as it provides the opportunity, especially if you are a smaller, more agile firm, to build a competitive edge over larger firms.”
AI-Driven Risk Management
Risk management is at the core of Smart Wealth’s AI model.
“It plays a huge role in allowing us to achieve our exceptional risk-adjusted returns. The lack of human bias means that our AI model can respond quickly and objectively to constantly evolving and complex market conditions,” Mitev explains.
“This results in it is recovering in 60% less time than industry benchmarks after downturns.”
A striking example of AI’s superior decision-making came during the 2008 financial crisis.
“An anecdote I like to tell to demonstrate the effectiveness of the AI’s decision making in economic downturns is its behaviour during the 2008 crisis. It moved its allocation 51% to cash on 19th June 2008, three months before the collapse of Lehman Brothers and the subsequent financial fallout. It reduced the cash to 5% on 17th April 2009, three months before the official end of the financial crisis. Without human biases, our model can identify these signals that often elude human analysts.”
Addressing AI Ethics
As AI takes a more prominent role in finance, ethical considerations become increasingly important.
“AI-driven decision making often presents challenges in assigning accountability as the model’s processes can function like a “black box,” Mitev acknowledges. “This highlights the importance of establishing clear parameters and guidelines for how the AI operates. Defining these boundaries ensures the system functions within ethical and operational constraints, ensuring investment decisions are fully aligned with the product’s explicit rules.”
He also notes that Smart Wealth’s AI does not interact with market participants—it simply analyses data, making it immune to emotional decision-making.
AI’s Contribution to Socially Responsible Investing
Beyond superior financial performance, AI-driven investing also has the potential to promote broader societal goals.
“It can support these aims in two ways. Our fee model is lower than industry benchmarks as we don’t have the same people costs, so we return more of the returns to our investors,” Mitev says. “We set the macro context for the AI to operate in so we can create products that align with the ethical choices of groups of people.”
He also envisions AI shifting the human capital in finance toward scientific and research-driven innovation.
“AI is going to make many human roles in asset management redundant. However, at the same time, it will create opportunities in other areas. Given that some of the brightest scientific and mathematical minds currently work in finance, I think that the potential for research and innovation is massive as this human capital transitions to other fields.”
Miro Mitev: The Vision Behind Smart Wealth
Mitev’s journey into AI-driven asset management was driven by a passion for technology.
“A fascination with technology led me to study AI, and during my PhD studies 25 years ago, I focused on projects that were actually developing AI solutions. When I turned my attention to asset management, the potential was immediately clear—there was already far more data than human minds could effectively process,” he recalls.
His experience also led him to recognise that human biases are nearly impossible to eliminate, reinforcing the need for AI-driven decision-making.
For those looking to leverage AI in any industry, Mitev offers this advice: “My advice, based on our experience, is to think beyond replacing people. The genuine potential of a completely different form of intelligence will likely only be unlocked by reimagining the system itself.”
With AI at the helm, Smart Wealth is redefining asset management. From superior risk-adjusted returns to faster recovery times and ethical investing, the company’s two-decade head start in AI innovation gives it a significant edge.
As the industry adapts to AI-driven investing, Miro Mitev’s vision offers a glimpse into the future—one where human emotion no longer dictates market decisions and AI unlocks new possibilities in finance and beyond.
