Artificial intelligence (AI)
Artificial intelligence has now become a major investment topic. The potential in the AI sector is enormous and plays a key role for major high-tech companies.
Opportunities and potential risks of AI
Some people envision AI as the beginning of the end of the world, while other tout the vast business opportunities and chances for humankind. (See: Artificial intelligence: where could the journey take us?) Artificial intelligence is a hot topic as well as the subject of heated debate. The benefits and drawbacks of this massive technological innovation are tightly intertwined. AI can be used with the best of intentions, but also for less noble causes. Warnings about the potential risks of AI systems cannot simply be ignored. Not by us as investors and certainly not by political decision-makers. Bearing this in mind, the European Commission has rolled out a proposal for a regulation governing artificial intelligence, the AI Act. A political agreement was finally reached in December 2023 after tough negotiations. The new law is the world’s first legislation governing AI to be adopted by a major regulatory authority. It is important that Europe led the way in this regard, as we can thus also set the standards for legislation at the global level as well.(also interesting: expert discussion on the Necessity of Regulating Artificial Intelligence)
Artificial intelligence: where could the journey take us?
For a long time, artificial intelligence was a subject found almost exclusively in the realm of science fiction. With the widespread use of ChatGPT, however, we have all been shown what artificial intelligence can do and how quickly it is penetrating many parts of day-to-day life. Artificial intelligence has the potential to change all of our lives. Of course, the debate rages on as to whether it will only have a beneficial impact or possibly an opposite effect as well.
AI is of great interest to the investment industry from several perspectives
For the investment industry, this topic is of great interest from a number of different perspectives. On the one hand, AI has become an important investment theme. It plays a key role for the big high-tech companies and is also of vital importance for other sectorss, such as health care, infrastructure, and education. On the other hand, the investment industry itself is a field in which AI can be deployed. Speed is an important element on the stock markets. Information, including misinformation, can trigger huge distortions in a matter of mere seconds. Indeed, we’re already seeing the occasional “flash crash” here and there, cases in which AI triggers stop loss orders, leading to massive sales, and within second billions of worth of assets are wiped out. As a result, real companies have sometimes lost as much as 10 to 20% of their value over the short term. This is another area where regulation is needed.
Funds that invest in AI
Artificial intelligence is "the" topic for equities. Many companies in this sector are seeing strong profits. Does it now make sense to be invested in this dynamic sector?
Progress in the field of AI is likely to continue at a rapid pace. The megatrend artificial intelligence has the great potential to change our society in the long term. Those who bet on the right companies and technologies can realise correspondingly large profits on the stock market. However, especially in such a fast-moving technology sector, developments can occur very abruptly at any time, turning the playing field upside down. Supposedly safe winners in the sector could then abruptly find themselves on the losing side. Continuous and careful observation of the market and good company selection by the fund management are therefore essential.
How is Raiffeisen-MegaTrends-ESG-Aktien performing?
Along with the equity markets in general, Raiffeisen-MegaTrends-ESG-Aktien can look back at two very volatile years. After a very difficult time in 2022, this global equity fund has bounced back strongly this year. How does the current situation look, and what is the outlook for the years to come?
ESG assessment & engagement
It is important to take a critical view of artificial intelligence, in particular for a responsible asset manager. At the same time, it is also vital to keep in mind the kinds of positive developments that artificial intelligence can promote. For instance, AI can make strong contributions to achieving SDGs 1, 3, 4, 6, 10, 13, and 14. Over the medium to long term and in conjunction with good regulation, AI may also be a positive trigger that facilitates the ESG transformation.
„E“ (environment): From an environmental point of view, AI opens up new possibilities in the analysis of networked databanks, as a result of which measures for environmental protection can be developed. On the other hand, the very large amounts of energy required, in particular for the (advanced) development of AI models, is an extremely negative factor.
„S“ (social): From a social perspective, AI has positive potentials in the fields of medicine and pharmaceuticals, while the possible loss of jobs due to AI is a negative factor.
„G“ (governance): The governance aspects are extremely varied. Artificial intelligence can lead to better security due to improved solutions in relation to criminal acts or cyber threats, but the risk of data misuse and various forms of manipulation is very high.
The dialogue with companies in connection with artificial intelligence is essential, as sensitive topics such as data protection, discrimination or liability issues can be proactively addressed and improvements can be demanded.
Company in spotlight: Intel
The young generation of 1968 is often associated with the start of the peace movement, significant progress in equal opportunity for women, the hippy movement of free love and flower-power, and the Woodstock music festival. However, 1968 also marks the year that one of the most important companies in the technology sector got its start. A brand that every hardware and software user comes into contact with and that everyone knows: Intel.
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The goal of SDG 10 is to ensure that all people, regardless of their social or economic situation, have access to resources, education, and opportunities to achieve their full human potential.
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Raiffeisen Capital Management sheds light on the hot topic of "AI", which is currently hitting our society with enormous speed and force, which we must confront and counter with clear strategies.
Interesting facts about technology
Background knowledge and insights from fund management
Stand: March 2024
The Raiffeisen-HighTech-ESG-Aktien and Raiffeisen-MegaTrends-ESG-Aktien exhibits elevated volatility, meaning that unit prices can move significantly higher or lower in short periods of time, and it is not possible to rule out loss of capital.