What happens when five controversial letters that have dominated the headlines in 2023 get together and hang out? For one investing expert, you get a potential recipe for disaster.
Marcel Stotzel, a portfolio manager with Fidelity International, says ESG fund managers who turned to big tech as a low-carbon, high-return bet are getting anxious as the sector experiments with artificial intelligence.
He fears what he calls "an AI blowback," which is when something unexpected triggers a meaningful market decline.
"It takes just one incident for something to go wrong and the material impact could be significant," he said. Some of the tech that is causing concern are things like fighter jets with self-learning AI systems.
And because of how it embraced tech, the ESG investing industry may be more exposed to such risks than most. Funds registered as having an outright environmental, social and good governance objective hold more tech assets than any other sector, according to Bloomberg Intelligence.
And the world's biggest ESG exchange-traded fund is dominated by tech, led by Apple, Microsoft, Amazon and Nvidia.
Speaking of ESG, Christopher Knapp, managing director and principal at Robertson Stephens, joined me on the Financial Planning Podcast this week to explain why advisors shouldn't sidestep difficult ESG conversations with clients.
For him, sustainable and green investing are fiduciary issues, not political issues. And advisors can play a crucial role in providing much needed understanding related to ESG investing.
Check out the story, the podcast and more, only at Financial Planning.
Anything else on your mind? Drop me a line at justin.mack@arizent.com. Have a great weekend, everyone!
Regards,
Justin

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