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LLMs Enhance Sector Portfolio Construction With Caveats
7.0
Researchers evaluate LLMs from OpenAI, Google, Anthropic, DeepSeek, and xAI for S&P 500 sector portfolio construction, prompting each model to select and weight 20 stocks per sector and testing performance across Jan–Mar 2025 (stable) and Apr–Jun 2025 (volatile). They find LLM portfolios often outperform in stable markets but underperform in volatile regimes; combining LLM selection with classical optimization improves performance and consistency.
Key Points
- 1Use LLMs from five providers to select and weight 20 stocks per S&P 500 sector
- 2Find LLM portfolios outperform indices during stable Jan–Mar 2025 on returns and Sharpe ratios
- 3Combine LLM selection with classical optimization to improve risk-adjusted returns and consistency across regimes
Scoring Rationale
Relevant multi-model empirical study with actionable hybrid approach; limited novelty and reliance on short out-of-sample periods.
Sources
Public references used for this report.
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