Investors are hunting for strategies to protect portfolios against too much exposure to AI, as US equity and credit markets become increasingly concentrated in AI-related companies. More than two-thirds of groups on the Russell 1000 index are linked to AI, according to Citigroup research. Big Tech “hyperscalers” and AI beneficiaries make up around 16 per cent of the US high-grade bond market, JPMorgan data shows.
“Clients are revisiting the way they need to diversify,” said Vincent Mortier, chief investment officer at Amundi. He noted the AI theme is “very powerful” but a curveball like a “big revision in earnings” could change its direction. Ryan Marshall, BlackRock’s global head of multi-asset strategies, said “trying to build portfolios with independent, uncorrelated sources of return is absolutely in demand.”
Marshall noted this concentration is leading people to private asset classes, hedge funds, and other areas with lower correlations. Daniel Gamba of Franklin Templeton said designated teams are assessing AI as a return driver to build portfolios with “the least exposure to the volatility of AI.”
Source: Financial Times Companies · Summarized by HeadlinesBriefing