AI Is Already in Your Portfolio

You can’t turn on the news these days without hearing about artificial intelligence. Whether it’s ChatGPT writing emails, self-driving cars navigating busy roads, or medical research uncovering new breakthroughs, AI feels like the “next big thing.” It’s natural to wonder: Should I be investing in AI?

Here’s the twist: if you already own a broadly diversified portfolio, chances are you’re already invested in AI—whether you know it or not.

The Misconception: You Need a Special “AI Fund”

Many investors assume that to participate in AI’s growth, they need to buy a hot new ETF or pick a handful of big-name tech stocks. The reality is that AI isn’t just a sector—it’s a force reshaping nearly every sector of the economy.

A recent study by Dimensional Fund Advisors pointed out that the five largest AI-themed ETFs overlap heavily with the broader market. As of December 31, 2024, those funds accounted for:

• 42.5% of the U.S. stock market capitalization
• 32.7% of global market capitalization

In other words, nearly half the U.S. market is already tied to companies involved in AI. And they aren’t just the tech titans you see in the headlines.

AI Is Everywhere

Sure, names like NVIDIA, Microsoft, and Apple dominate the conversation. But AI is also at work inside companies you wouldn’t immediately associate with Silicon Valley.

• Caterpillar is using AI to improve heavy machinery and mining operations.
• Honeywell is applying AI to energy efficiency and industrial automation.
• Thomson Reuters is embedding AI into legal and financial research tools.

If you own a diversified stock portfolio, you already own a piece of that future.

The Risk of Chasing “Winners”

Of course, hearing all the AI excitement, it’s tempting to try to pick the “next NVIDIA.” But history reminds us how quickly market darlings can fade.

• In the late 1990s, the dot-com boom promised endless riches—yet most of those companies disappeared.
• In the early 2000s, Nokia and Blackberry looked unstoppable. How many of us still use their phones today?
• More recently, whole industries—from 3D printing to solar panel makers to cryptocurrencies—have gone through boom-and-bust cycles.

The lesson is clear: betting heavily on a handful of companies or sectors carries real risks. Picking winners in advance is harder than it looks.

For many retirees and pre-retirees, the real question isn’t “How do I buy into AI?” The more important question is: “How do I ensure my portfolio can provide reliable income, manage risks, and still capture growth opportunities like AI along the way?”

That’s why chasing a few “AI winners” isn’t necessary—or wise. A broadly diversified, global equity portfolio already includes the innovators shaping the future while balancing them with thousands of other companies. This gives you meaningful exposure to progress without betting your retirement on a handful of stocks.

Ultimately, investing isn’t about headlines—it’s about building a plan that supports the life you want to live. Whether that means traveling more, treating your family to experiences, or simply enjoying the peace of mind that comes from knowing your money is working for you, your portfolio should be designed to make that possible. And if it’s broadly diversified, you’re already part of the AI story.