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Asset Management Firms Intend to Increase AI Budgets

Of technology decisionmakers surveyed by Rackspace Technology, 75% expect a bigger budget in the future, and 48% said artificial intelligence has substantially increased sales at their firm. 
By Matt Toledo



Technology decisionmakers at asset management firms report that their companies plan to increase their investments in artificial intelligence technology and have already seen substantial benefits from using it, according to a report from IT and cloud computing company Rackspace Technology, which surveyed 1,420 IT decisionmakers at asset management firms in February.

The information in this story was based off of a limited preview of the research.

The survey, conducted by Rackspace US Inc., found that 75% of IT decisionmakers plan to increase their budgets for AI this year by anywhere from $500,000 to $5 million. According to the report, 48% of respondents credited AI with substantial benefits.  The survey of asset managers was part of a report titled The 2024 Global AI Report by Rackspace Technologies and Amazon Web Services. 

“At many companies, IT departments went from being a necessary evil to getting whatever they want now that AI and the integration of data have caused the fastest transformation in technology history, as compared to the development of servers/web tech, cloud, e-commerce and mobile which took years to be adopted,” said Jeff DeVerter, chief technology evangelist at Rackspace, in a statement. 

Of the 48% of respondents who said AI brought substantial benefits, 57% said they were able to create personalized marketing campaigns using AI, 55% said AI helped increase innovation, and 48% said AI helped increase sales. 

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Other findings in the survey include:

  • 69% identified cybersecurity as the biggest risk when adopting AI;
  • 69% say AI will require more improvement before it can be trusted, and answers it generates currently need human interpretation;
  • 57% said the IT division is a main driver of AI strategy at their firm;
  • 26% said a revenue-generating division is a main driver of AI strategy at their firm; and
  • 18% said executive leadership is a main driver of AI strategy at their firm. 

Rackspace argued that revenue-generating units at asset management firms have the most to gain by integrating AI and machine learning into their workflow. According to the survey, 35% of firms use revenue growth to measure the success of AI, even though it is mostly being used by non-revenue-generating divisions.

“In order to allow AI to generate more revenue, more revenue-generating departments should be encouraged and enabled to use AI,” said Nirmal Ranganathan, a vice president of engineering and AI architect at Rackspace, in a statement. 

The survey also found that 55% of asset management firms have sought employees who have AI and machine learning skills.

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Asset Managers Ponder Investments in AI as Security Risks Compound

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Home > News > Pensions > Funded Status of Largest 100 US Public Pension Funds Rises to 78.6%
Pensions

Funded Status of Largest 100 US Public Pension Funds Rises to 78.6%

Per Milliman, it is the highest funded ratio for public defined benefit plans since May 2022. 
By Matt Toledo



Public pension funded status increased to 78.6% at the end of February, up from 77.7% the month before, according to the monthly Milliman Inc. 100 Public Pension Funding Index, which tracks the funded status of the largest 100 public defined benefit plans in the U.S.  

Public plan funded status rose in February to the highest level since May 2022, when funded status for these plans stood at 78.4%, and 78.6% the month before. In the interim, funded status bottomed out at 69.8% in September 2022.  

The month-to-month increase of almost one full percentage point represents a $56 billion rise in funding. According to Milliman, individual plans returned anywhere from 0.0% to 3.2% in February. Plans gained $79 billion in market value, far exceeding $9 billion in negative cashflow. 

The average funded status of 78.6% across the largest 100 public plans represents a $1.333 trillion gap between plan assets and liabilities, as of February 29. That gap stood at $1.389 trillion the month before.  

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Plan assets among the PPFI were $4.907 trillion at the end of February, an increase from $4.837 trillion in January. Plan liabilities were $6.240 trillion, up from $6.226 trillion the month before.  

On a plan-by-plan basis, Milliman reported no funds reached the significant thresholds of 60% or 90% in February. 

“Although most plans saw an improvement in their funded status, this month’s above-average market performance did not move any plans across either the 60% or 90% funded ratio mark,” said Becky Sielman, co-author of Milliman’s PPFI, in a news release. “As a result, by the end of February we’re holding on to the gains we saw in Q4 of last year, with 21 plans above 90% funded, and 15 plans below 60% funded.” 

According to a January 2024 report from Equable regarding the state of public pensions in 2023, a majority of public plans are either distressed or fragile, meaning they have funded statuses of 60% or less or between 60% and 90%. The Equable report found that only 10 states had pension plans that had a funded ratio greater than 90%, while only six were fully funded. According to Milliman, plans in the PPFI had a funded status of 78.2% at year-end 2023.  

According to the PPFI, 64 plans have funded ratios between 60% and 90%, while 21 plans have funded ratios higher than 90%. Out of those 21 plans, nine are fully funded or are in surplus, with two plans exceeding 120%.  

Milliman projected that public plan funding could increase to 80% in a baseline scenario by the end of February 2025, assuming that these plans achieve their assumed rate of return, with a median interest rate of 7%. In an optimistic scenario, funded status is projected to increase to 85.3% over the next year if plan assets return 7% above their assumed rate of return. In a pessimistic scenario, funded status could decline to 74.7% if plans return 7% less than their assumed rate of return.  

Related Stories: 

Public Pension Funds Shifting Public Assets to Private Equity, Real Estate, According to Milliman 

Stagnant Returns Produce Lower Public Pension Funded Levels in January 

Most US Public Pension Funds Are Distressed, per Equable Report 

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