Can You Actually Get AI Out of Your Portfolio?

Want less AI in your portfolio? It may be harder than you think. According to Merryn Somerset Webb from Bloomberg:

• The top 10 holdings in many global ETFs now account for 25% or more of their portfolios and are dominated by giant tech companies, creating concentration risk for investors who may think they’re broadly diversified.
• Switching to a value ETF doesn’t solve the problem. Micron, for example, is the largest holding in Vanguard’s Morningstar Value ETF, while other value funds have major positions in AI-linked companies, including Cisco, Microsoft, and Meta.
• Investors seeking to reduce their exposure may need to look beyond passive funds to actively managed value funds, where managers are more deliberate about avoiding companies or valuations they believe are too exposed to the AI boom.
• Somerset Webb also suggests looking at geographic diversification, flagging markets such as India, Korea (beyond the semiconductor companies), and the UK, as potential ways to reduce reliance on the AI trade.

Our take? Rather than aiming to avoid AI completely, what’s more critical is understanding what you actually own, and whether your portfolio is as diversified as you think it is.

And if you’re looking to diversify your life from AI, too, check out Slow AI, a Substack by Dr. Sam Illingworth, Professor of Critical AI Literacy at Edinburgh Napier University, for an interesting perspective on knowing when not to use AI. If you need a basic primer on diversification and asset allocation, read Investing Basics for Beginners Installment #3: Never Put All Your Eggs in One Basket.