Chris Ford, Manager of the Global AI Fund at Sanlam Investments UK, comments on the potential impact artificial intelligence could have on diversified portfolios.

In our opinion, artificial intelligence (AI) is a transformational investment theme of very long duration, and its longer-term social and economic impact could be comparable to that of the railways, the internal combustion engine, the telephone or television...

We think AI should play a role in all diversified portfolios – even if you don’t agree with or like the deployment of AI, it is here – the genie is out of the bottle. Five  or ten years ago things like self-driving cars and ‘doctor bots’ sounded like something from a science fiction film – now they are a reality.

We’d urge investors to think about how AI will affect the earnings and long-term growth trajectories of the companies they invest in – companies who use and deploy AI can build even stronger moats around their existing businesses, but those that don’t engage run the risk of potentially becoming irrelevant. For example, in the US we’ve already seen some educational companies warn that AI has had a negative impact on their business, as the rise of generative AI (and particularly the emergence of ChatGPT) has led to reduced demand for traditional learning tools... 

Stepping back a little, our core thesis is that we expect AI to permeate the entire economy over time. This is something that all investors should think about – not least because some businesses will face profound disruption because of AI.

Full release: The impact of AI on everyday life

✉️ John Howard, Sanlam Investments UK, john.howard@sanlam.co.uk