Exclusive: Goldman Sachs launches AI-free index
Add Axios as your preferred source to
see more of our stories on Google.
Illustration: Natalie Peeples/Axios
Goldman Sachs has launched an S&P ex-AI index, SPXXAI, which lets you invest in the S&P 500 benchmark index minus all things AI.
Why it matters: This product is proof of the demand among investors for a way to hedge their exposure to the AI trade.
What they're saying: "Excluding 'AI enablers' from the passive benchmark would eliminate the noise introduced by the AI hype," Louis Miller, head of the firm's equity custom basket desk, wrote in a note to clients about the new index.
- The ex-AI index is a compilation of all the stocks in the S&P 500 that are not related to AI, also referred to as old-economy stocks.
- It's available exclusively to Goldman customers, created in collaboration with S&P Dow Jones Indices.
Zoom in: Taking all the AI out of the S&P doesn't leave much behind, as AI companies make up ~45% of the index, according to the note.
- Over the last three years, the S&P 500 is up 76%. The ex-AI index is only up 32% in that same time period.
Between the lines: Hedging by betting against the S&P can be brutal while it keeps going up.
- Goldman recommends its ex-AI index as a superior hedge to broad S&P hedging.
- Buying an index that is filled with old-economy stocks that aren't as driven by the AI trade is a better hedge, Miller argues, because it's more of a pure diversification play that doesn't require you to bet on or against the AI trade.
The bottom line: Typically, you buy an index because it's diversified.
- But the AI trade and its impact on the market caps of the top stock in the S&P has made the index concentrated on the tech theme.
- An index that drops that theme entirely could be a way to give investors the diversification they're craving.
