Andrew Ang: Should AI Agents Run Your Asset Allocation? | #653

AI agents are transforming investment management by enabling scalable, parallelized, and self-improving workflows that outperform traditional human committees through productive dissent. By specializing agents for specific asset classes and construction methods, firms can replace static, error-prone processes with dynamic, exception-based decision-making. Beyond technology, tax drag remains a primary, often ignored, inhibitor of wealth accumulation. Historically, taxes have eroded approximately one-third of U.S. equity portfolios over three decades, making tax-aware asset location and strategic account management essential. Andrew Ang, founder of TaoBalance and former BlackRock executive, emphasizes that achieving tax alpha is significantly more reliable than chasing investment alpha. Investors must move beyond pre-tax performance metrics, as the compounding effect of tax drag necessitates a holistic, multi-period approach to portfolio construction that accounts for varying tax treatments across taxable, retirement, and trust accounts.