By Bas Kooijman, CEO and Asset Manager, DHF Capital S.A
A quiet technological arms race is unfolding within the hedge fund industry, and a clear set of winners is emerging. Firms with mature Generative AI pipelines are capturing stronger annualized returns of 1.8-3.5% than their non-AI counterparts. The technology is used by all types of funds and for all types of strategies, including equity long/short, quant, and macro strategies, with funds that have invested in in-house language models and specialist AI teams showing the most consistent results.
Hedge funds are using GenAI to extract edge from alternative data, ranging from social sentiment to satellite imagery, at scale and speed previously unattainable. Retrieval-Augmented Generation (RAG) tools have become particularly powerful, allowing research teams to mine decades of internal memos and proprietary datasets for non-consensus insights. Meanwhile, synthetic data generated by Generative Adversarial Networks (GANs) is improving stress-testing and refining trading models. These capabilities translate directly into better-informed trades, faster research cycles, and higher conviction in portfolio positioning.
Operationally, GenAI is also proving transformative. Leading firms have automated compliance reviews, investor communications, and document triage, improving efficiency and reallocating human capital to alpha-generating tasks. By extending their research surface area without expanding headcount, funds are achieving scale advantages that widen the performance gap. The divide between tech-forward leaders and lagging traditionalists is becoming structural, redefining what it means to compete at the top of global finance.
