AI Strong Long-Term Investment Theme – WisdomTree Survey

Amanda Cheesley Deputy Editor 27 November 2023

AI Strong Long-Term Investment Theme – WisdomTree Survey

WisdomTree has just released its 2023 survey, covering 803 professional investors across Europe.

A new survey commissioned by WisdomTree, a global financial innovator, finds that professional investors in Europe view artificial intelligence (AI) as the most compelling long-term investment theme.

WisdomTree’s research found that AI ranked as a top long-term thematic investment opportunity (28 per cent) for European professional investors as developments in artificial intelligence and solutions such as ChatGPT propelled a tech stock rally in the first half of 2023 against an uncertain macro backdrop.

AI was also deemed the most compelling long-term thematic investment opportunity in the 2019 professional investment survey commissioned by WisdomTree, which showcases investor confidence in the theme over recent years.

The survey, conducted by Censuswide, a market research consultancy, polled 803 professional investors across Europe, ranging from wholesale financial advisory firms and institutional investors to wealth managers and family offices. The investors surveyed are responsible for approximately €4 trillion ($4.4 trillion) in assets under management.

In 2022, a series of overlapping geopolitical and economic shocks undermined investor sentiment and risk taking, putting portfolios on a defensive footing, the firm said in a statement. This year, despite many of these headwinds persisting alongside new risks to contend with, an optimistic technological breakthrough on AI has attracted investors.

Alongside this, the research found that across Europe, 68 per cent of professional investors surveyed reported that the risk appetites of their clients had increased, as they were willing to boost exposures to riskier asset classes such as thematic equities like AI.       

“The story for tech investors in 2023 has been driven by AI. Yet, it has been the mega cap tech stocks that have benefited most, rather than those pure play AI companies, suggesting there is still upside to be had for those interested in the theme,” Pierre Debru, head of quantitative research and multi asset solutions at WisdomTree, said.

“For those with long-term conviction in AI, there are smaller and exciting tech stocks providing pure exposure to artificial intelligence that have not necessarily participated in the rally we’ve seen,” he added.

When considering investing in AI, almost half of the professional investors surveyed said that they were seeking diversified exposure to relevant business models, rather than  entirely to any one part of the AI supply chain. Purity of exposure to artificial intelligence (44 per cent) ranked second, indicating that investors are seeking investment products that truly represent the AI theme rather than investing in companies loosely associated with it.

Currently, 85 per cent of European professional investors have an allocation to at least one thematic strategy, with 52 per cent using exchange-traded funds to gain their exposure.

“A benefit to accessing thematics through ETFs is that they are transparent, allowing investors to spot any overlaps in their portfolio,” Chris Gannatti, global head of research, WisdomTree, said. “We believe that thematic ETFs, built with third-party subject-matter experts, are best placed to accurately reflect the industry and ecosystem – while providing all the transparency needed around holdings.”

New York headquartered WisdomTree, which has approximately $97 billion in assets under management globally, offers a suite of exchange-traded products (ETPs), models and solutions. These cover equity, commodity, fixed income, leveraged and inverse, currency, cryptocurrency and alternative strategies.

Register for WealthBriefing today

Gain access to regular and exclusive research on the global wealth management sector along with the opportunity to attend industry events such as exclusive invites to Breakfast Briefings and Summits in the major wealth management centres and industry leading awards programmes