Fund manager unpredictability drives outperformance. Recent research reveals that AI can predict 71 percent of fund managers' investment decisions, but predictability correlates with underperformance. Managers with longer track records follow more rigid processes, leading them into crowded stocks that fit conventional investment styles. Conversely, fund managers granted creative freedom to deviate from standard approaches and pursue unconventional opportunities generate superior returns. The research suggests that quantitative investing increasingly falls within AI's capabilities, while the creative element remains uniquely human. Alpha generation depends on managers willing to trust their judgment on companies others overlook, making unpredictability a valuable trait in fund selection.
