How to reduce exposure to US tech and AI stocks

Hi,

Given the recent behaviour of the US Big Tech giants, I want to move away from investing in them. I currently have a Stocks & Shares ISA with Vanguard (FTSE Global All Cap) which is heavily weighted towards Big Tech. Is it even possible to find something with decent returns without them? I appreciate it's leaving money on the table, but there has to be something else out there, surely?

Clair

Hi there,

Here are some tips to reduce your exposure to US tech and AI stocks (without putting all your eggs in one rather technology-focused basket). The investment world is bigger than Silicon Valley (thank goodness!), and here are your main options:

1. Property: Pop your money into bricks and mortar by buying actual properties to rent out, or take the easier route with REITs (that's Real Estate Investment Trusts - basically property companies you can buy shares in). It's a good way to earn regular income and potentially watch your investment grow over time.

2. Commodities: Good old gold and silver never go out of fashion. Oil too. These physical materials tend to do their own thing regardless of what tech stocks are up to. Gold, in particular, is popular when inflation is a pain.

3. Infrastructure: These are investments in the boring-but-essential stuff like roads, energy plants, and bridges. Bonds in this sector tend to give steady returns. Not exactly an exciting dinner party chat, but that's rather the point.

4. Going global: Look beyond the US to Europe and Japan - their stock markets are full of companies that have nothing to do with AI or tech. Many have been quietly making money for decades.

5. Emerging markets: Markets such as China and India have their own growth stories – such as growing consumption, or the energy transition. They can be volatile but offer lots of opportunities for good fund managers.

Some specific types of funds to consider:

Quality companies: Look for funds investing in solid companies that make actual profits and pay dividends. These tend to be established businesses with strong brands that have been around the block a few times.

Multi-asset funds: These spread your money across shares, bonds, and cash. They may not give as high a return as some stock market-focused funds, but are likely to be less volatile.

Infrastructure funds: These invest in those essential services we mentioned earlier. They tend to plod along quite happily regardless of whether the latest AI chatbot is making headlines.

Equity income funds: These funds focus on dividend-paying companies and may be focused solely on the UK, or you can look at global options too. This means you get some of your money back in cash every year as a thank you for your investment.