The AI rally is disrupting traditional diversification strategies at pension funds and sovereign wealth funds, with risk spreading beyond technology stocks into private equity, corporate bonds, and infrastructure. According to ChainCatcher, institutional investors are now re-evaluating their overall portfolio exposure to AI.

Goldman Sachs estimated that AI infrastructure-related companies account for about 40% of the S&P 500’s total market value, while Apollo data showed AI-related issuance has made up nearly half of investment-grade bond issuance this year and 87% of venture capital funding. New York City Retirement System Chief Investment Officer Monte Tarbox recently rejected a fundraising request from a private fund because of its heavy AI exposure.

Institutions are also struggling with the lack of a unified standard for measuring AI exposure. The Los Angeles County Employees Retirement Association estimated that 8% to 19% of its holdings are AI-related, and an Invesco survey of 90 sovereign wealth funds found that more than half ranked market concentration as the top risk of AI investing. Some large institutions have begun using a whole-portfolio approach to track AI exposure and correlations across assets, while others are using AI tools to monitor their own portfolios.

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