An AI signal overlay is added to a fundamental long-only book. Whic…

Question

An AI signal overlay is added to a fundamental long-only book. Which portfolio construction principle is MOST important?

Accepted Answer

Integrate signals inside a constrained optimizer with risk budgets, turnover limits, and human override policy — not unconstrained raw scores. — AI scores go through risk budgets, turnover caps, and override policy — not raw 100% bets.

Answer

Ignore risk model constraints because AI is always right.

Answer

Trade the raw model score as 100% portfolio weight daily.

Answer

Disable transaction cost models.

An AI signal overlay is added to a fundamental long-only book. Which portfolio construction principle is MOST important?

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