Is AI making diversification harder?
66/ 100United States
Summary
Aberdeen argues that portfolios which look diversified may not be: global equities, emerging markets and small caps are increasingly driven by the same AI theme, with correlations to an AI ETF proxy of 0.79 for global equities, 0.69 for emerging markets and 0.75 for small caps. Technology's weight in the MSCI ACWI Index has risen from around 10% to 31% , contributing roughly half of overall index risk, so owning more equity markets no longer guarantees different sources of return. Cash, bonds and property show lower AI correlations but sacrifice return, hence the pitch for listed infrastructure serving data-centre demand as AI-adjacent growth through different drivers.
Highlights
Traditional diversification routes are increasingly exposed to the same drivers that dominate global equity markets.
The sector’s weight within MSCI ACWI Index has risen from around 10% to 31%, while technology now contributes roughly half of overall index risk.
Global equities exhibited a correlation of 0.79, EMs 0.69, and global small caps 0.75.
Contrarian Viewpoints
- Correlations to an AI ETF proxy over a two-year window are period-dependent and may fall if the AI trade unwinds or broadens.
- Listed infrastructure is itself exposed to AI build-out demand and interest rates, so it is a different driver, not an independent one.
Investment Implications
- Audit portfolios for true AI factor exposure rather than counting holdings, and consider listed infrastructure, especially power and energy assets serving data-centre demand, as a differentiated AI-adjacent allocation.