standard life pension funds for AI crash

yok

hiya,

I've been reading up about how it's wise to get out of AI. My sleuthing has led me to believe that I should get involved with funds that deal with companies that can pass on any price increases onto their clients, eg staples..Or something that shouldn't crash, eg farmland. I've been looking through the fund options in standard life, but there don't seem to be any applicable funds. I'd rather not move my pension. Any advice? Thanks

Aylesbury_Duck

https://forums.moneysavingexpert.com/discussion/6687347/standard-life-pension-funds-for-ai-crash

Not sure where to begin, to be honest. If it was as simple as "getting out of AI" and picking funds that "don't crash", we'd all have done it ages ago. How old are you? What's your retirement plan? How much income will you need in retirement? What debts do you have? What savings do you have? Partner/spouse?

Why would you rather not move your pension? If you're convinced you can pick winning stocks, and SL don't offer the right funds, then you would have to move to get what you want.

Until you have a proper plan for what you want to achieve, and by when, then wondering about the how should wait.

ali_bear

Advice would be to avoid anything with significant exposure to US Tech stocks.

When it comes to being invested in AI, we all are, to a greater or lesser extent. In the event of a real cratering in those US tech stocks we will all be affected. Same as for a Euro debt crisis, war in Taiwan, another pandemic, etc etc.

Exodi

The problem you'll face is that most of the market is already exposed to AI.

It's not just the AI software companies or the companies that make hardware for data centres that will suffer if there is an 'AI crash', all of the companies that use it will also be affected (hard to find a company that doesn't use an AI live chat bot nowadays). Reason I say this is the usual intuition is to pivot to small-cap but I suspect they would also be heavily impacted by an AI crash (it's worth remembering that small-cap companies have market caps between $250M - $2B in the US, so not your local independent farm/coffee shop).

The ripples would affect everyone - unless your intending on buying farmland like you suggested, the only real options are to reduce US tech exposure in favour of non-tech sector funds or Europe and UK index funds as they feature a much lower tech weighing (often under 10%) and lean more heavily into finance, industrial, healthcare, etc.

Linton

The easiest and least disruptive way to reduce dependence on the big AI stocks without becoming too dependent on something else is probably to simply reduce your allocation to the US and increase the allocation to europe, emerging markets, japan etc.

Whether your pension gives you that flexibility Is something you will have to research.

Much depends on your time frame. If you arent retiring for another say 20 years just keep broadly invested in equities and carry on paying in. There will be plenty of new things to worry about later, time will provide the balance.

On the other hand if you are retiring in 5 years time you should already be thinking about your future financial strategy and perhaps starting to implement it.

Albermarle

https://forums.moneysavingexpert.com/discussion/6687347/standard-life-pension-funds-for-ai-crash

My sleuthing has led me to believe that I should get involved with funds that deal with companies that can pass on any price increases onto their clients, eg staples..Or something that shouldn't crash, eg farmland.

Any funds this specialised would be very niche, and most likely not even a SIPP with thousands of options would have quite what you were looking for.

Exodi

https://forums.moneysavingexpert.com/discussion/comment/82174785#Comment_82174785

Plus the logic is inherently flawed as it completely ignores the impact price has on demand (e.g. competition, elasticity, etc).

A company that is able to hike its prices up quicker than everyone else is likely to suffer from reduced demand as its competition gains relative appeal.

It's not as simple as businesses receiving cost increases of X% and going "right, draft an email to pass on this X% increase" - so much thought and consideration needs to go into demand forecasting, marketplace analysis, cost analysis, etc. UK businesses have been absolutely hammered by cost inflation over the past few years (unfortunately global events aren't even the biggest concern, recent government policy has been devestating for many) - so many opt to pass on only a fraction of cost increases and absorb the rest/cut their cloth accordingly.

As gets coined by the media so often, we're in a cost of living crisis, consumers are exceptionally sensitive to price increases.

yok

Thanks everybody for replying. I'm not paying any more into the pension pot at the minute. I've downloaded the "winstondaily" app and wading through the level of analysis on companies..finding my feet. I'll be back if I get any insights and let yous know the approach I took. Ta

Bostonerimus1

I'm also worried about the tech concentration of US markets, so I've sold US index equity funds and moved the money into cash and value index funds. I don't expect to avoid the consequences of an AI crash, just mitigate them.

kempiejon

https://forums.moneysavingexpert.com/discussion/comment/82175660#Comment_82175660

One of the things I'd tell an earlier version of me would be to put more into your pension early as you can. We are capped at a maximum amount each year, although some can be backdated it's worth taking those tax advantages were one can. Speshally if it's part of a company benefit.

Standard life might well offer something suitable, not too AI biased though farmland seems less likely and a bit niche. Perhaps a Merican thing?

I know I can't know which of being in or out of AI will turn out best but I'd keep investing non the less. Perhpas like other investors one could focus in other areas of industry and geography.