Are there any pensions that don’t invest in AI

FrustratedPoetMCR

I am concerned about the fast growth of the AI industry. Every company I deal with at the moment is using AI bots and LLMs, and work are busy developing their latest strategy around AI.

But growth isn’t infinite, and I’m worried that when the bubble bursts, my already meagre pension (I started late) will reduce in value.

Are there any pensions that have divested from AI? Or is it a case of - just hold steady and wait for the world to right itself? I’ve still got 20 years until I can retire, but I’d prefer to pick the safest option.

ewaste

Making an active decision to avoid a sector whether it be AI today, Financial Services in the 2000s or Telecoms in the 1990s generally just leaves you worse off in the longer term. Time in the market vs timing the market is the age old saying.

What if the current AI bull run continues for the next decade and then corrects downward considerably. You'll have had to fight the fear of missing out on the climb upwards to perhaps be placated when the crash comes. Although if you've timed the market once by staying out you'll typically time it again by jumping in.

"Pensions" are just a Tax Wrapper in which you can hold assets. You will no doubt have a range of funds available to you to choose from if you have a workplace Defined Contribution pension like the vast majority do.

westv

Sounds a good question to ask AI.

Linton

https://forums.moneysavingexpert.com/discussion/6674391/are-there-any-pensions-that-don-t-invest-in-ai

Do you mean avoiding investing in companies that produce AI, ones that use AI, or ones that sell AI?

Avoiding investing in serious producers of AI is difficult in that much AI development is carried out by companies for which it is a very small part of their total business. You would want such companies in your portfolio. Other major AI developers companies don’t have shares available on the stock market and so you would not be investing in them anyway.

The one company I would be careful of is Nvidia which is dependent on its current domination of AI hardware. History shows that any computer hardware developer can only retain a dominant position in the relatively short term. Most of the previous market leaders no longer exist or are now relatively small players.

Investing in companies that have a policy of not using AI seems bizarre and again difficult. Which companies have stated such a policy?

Selling AI services could be profitable but I cannot think of any large company that has a business doing this other than as part of a much wider offering.

ali_bear

We are all invested in AI.

What you could consider is avoiding tracker funds and investing in actively managed funds instead? But with 20 years to retirement you have plenty of time for a crash, or multiple crashes, to happen and recover from. Time in the market beats timing the market, as has been said.

dunstonh

Are there any pensions that don’t invest in AI

You choose your investments in the pension, not the pension itself unless you are unfortunate enough to have a pension that doesn't give you investment choices. There are not many that only have one option, but there are a handful.

So if you don't want a particular industry you just select the investments that meet your objectives. If your pension doesn't have the range of investments that meet your objectives, then you consider changing the pension. Unless there is some contract rule or other reason that overrides that choice, such as an employer pension with limited investment choice, but you don't want to give up the free money from the employer

leosayer

If you want to select investments in your pension that avoid certain sectors or companies then you'll need a SIPP where you can select your investments. You can then select the specific funds or companies that meet your requirements. This is not a trivial task.

Firstly though, you seem to have decided that we are in a bubble that must burst. There is no certainty of that - it will only be known in hindsight.

For all we know, AI may lead to the destruction of certain companies. If you become over-exposed to those instead of AI-related companies then you may have a worse outcome with you pension.

In short, the best outcomes in pensions can generally be achieved by staying invested in a whole-of-market portfolio.

squirrelpie

The one company I would be careful of is Nvidia which is dependent on
its current domination of AI hardware. History shows that any computer
hardware developer can only retain a dominant position in the relatively
short term. Most of the previous market leaders no longer exist or are
now relatively small players.

I agree with you that Nvidia currently dominates AI hardware. I personally avoid buying any of their products. Have you read "The Nvidia way", by any chance? It explains why Nvidia has managed to avoid the short-term harware dominance phenomenon so far at least.

barnstar2077

A correction is coming, it always is.

If you worry about a sudden drop, then equities may not be for you.

bjorn_toby_wilde

I think the OP has a point in that AI does look like a bubble in many ways.

I too have concerns about the heavy focus on Tech and also the weighting towards the US of some (most?) of the major tracker funds. They don’t seem as diversified as they once were.

If you add in SpaceX, which to my mind has big governance issues, then these funds start to look a bit too concentrated for me when I chose them originally for their diversity.

The issue for me is how to diversify some of my portfolio away, as exUS funds are easy to obtain if you’re US based but not if you’re based anywhere else it seems (correct me if I’m wrong please). I don’t think the answer “perhaps equities are not for you” is helpful. The question being asked is surely how to find an index/fund to balance a portfolio better. It’s not all or nothing.

The latest Monevator newsletter poses the same question and has some interesting takes. I think the fund he suggests looks like the kind of thing I’ve been looking for.

dunstonh

I too have concerns about the heavy focus on Tech and also the weighting towards the US of some (most?) of the major tracker funds. They don’t seem as diversified as they once were.

Just a clarification that the high weighting towards us is on global tracker funds. It won't be on all types of tracker funds. And many portfolios prefer to use regional or country trackers to allow them to select their own allocations across the world.

The issue for me is how to diversify some of my portfolio away, as exUS funds are easy to obtain if you’re US based but not if you’re based anywhere else it seems (correct me if I’m wrong please).

This ties in with my response above. There are plenty of country-specific or region-specific tracker funds. The use of those lets you tilt your portfolio in any way you like.

And if you are thinking that AI and tech have become a bubble waiting to burst, then you can get global infrastructure trackers as well.