In the previous paradigm, asset allocation was a periodic exercise: a quarterly rebalance to fixed weights. Today, AI has transformed “rebalancing” from a maintenance task into a source of Alpha. By 2026, the firms that rely purely on static models will likely find their risk-adjusted returns trailing those of “AI-Enabled Active” competitors.
1. The End of ‘Set and Forget’
In the previous paradigm, asset allocation was a periodic exercise: a quarterly rebalance to fixed weights. Today, AI has transformed “rebalancing” from a maintenance task into a source of Alpha. By 2026, the firms that rely purely on static models will likely find their risk-adjusted returns trailing those of “AI-Enabled Active” competitors.
