By Ted Stricker, CFP®
A question we hear often from our clients at Bernath + Rosenberg:
“Why doesn’t my portfolio own more artificial intelligence stocks, energy producers, or real estate funds, especially when these areas get so much attention?”
The answer might surprise you: your portfolio likely already owns a substantial slice of all three. It just doesn’t show up the way you’d expect on a pie chart. Let’s walk through the reasons why that is.
Where the Market Already Prices These Trends
A globally diversified, market-cap-weighted portfolio isn’t built by guessing which industries deserve a bigger slice. It reflects the combined judgment of millions of investors who buy and sell shares every day, pricing companies based on current earnings, expected growth, the cost of raising capital, and competitive position.
When a sector like energy or real estate makes up a smaller share of a broad index today, that isn’t an oversight. It’s the market’s collective read on the value of that sector relative to everything else, updated continuously as new information comes in. If the picture changes, the weighting changes with it.
AI Shows Up in More Places Than the Headlines Suggest
Artificial intelligence isn’t confined to companies that brand themselves as AI businesses. Much of its economic footprint runs through semiconductor makers, cloud computing providers, enterprise software firms, and industrial automation companies, all of which are profiting from AI adoption across the broader economy.
Many of the largest technology platforms in the world are investing heavily in AI research while still earning most of their revenue from existing products and services. Owning shares of these companies means participating in AI’s growth, even without owning a single business that calls itself a “pure AI play.”
Keep in mind this one limitation: some of the most talked-about AI innovators are privately held.
Their absence from public markets has nothing to do with portfolio construction and everything to do with the fact that they simply aren’t available to traditional equity investors as yet.
Real Estate’s Footprint Goes Beyond REITs
Publicly traded real estate, mostly held through real estate investment trusts (REITs), makes up a small slice of global equity markets, but that slice is more varied than expected. It includes:
- Residential REITs: Multi-family housing structures and single-family rental portfolios
- Industrial and logistics: Warehouses and fulfillment hubs critical to global e-commerce
- Data centers: The physical infrastructure powering cloud computing and AI network processing
- Healthcare facilities: Medical office buildings, hospitals, and senior housing facilities
- Infrastructure and retail: Telecommunication towers, specialized retail complexes, and selective office spaces
Beyond REITs, plenty of companies outside the real estate sector carry substantial property holdings of their own. Retail chains, hotel operators, and technology companies running large data center networks all own real estate as part of doing business, even though none of them are classified as real estate companies.
Energy Exposure Isn’t Limited to Oil and Gas Producers
Energy holdings in a diversified portfolio extend far beyond traditional extraction companies. Broad exposure typically captures the entire energy lifecycle through distinct segments:
- Traditional infrastructure: Integrated oil and gas producers, refiners, and pipeline or storage network operators
- Utility transition: Regulated utility companies increasingly shifting toward solar, wind, and industrial battery storage generation
- Self-generation and industrial power: Large-scale industrial, manufacturing, and transportation corporations that manage independent power microgrids to hedge against fluctuating grid costs
Why Indirect Exposure Often Outweighs a Concentrated Bet
AI, energy, and real estate move through nearly every corner of the economy rather than staying contained in one labeled sector. AI development drives demand for electricity, semiconductors, and data infrastructure.
A slowdown in real estate can work its way into bank balance sheets, construction schedules, and retail foot traffic long before it shows up in a property stock’s quarterly report. Rising energy costs follow a similar path, feeding into manufacturing budgets and shipping rates well before anyone notices the move in an oil or utility stock.
A broadly diversified portfolio tends to capture more of that web of cause and effect than a narrow bet on a single sector, and history suggests it does so with less risk than chasing whichever industry is getting the most attention this year.
Discipline Still Has a Place
Popular sectors tend to attract more money than their underlying earnings can support, and investors who chase last year’s winners often end up paying a premium right as enthusiasm fades. A consistent, rules-based approach can help here.
Rather than guessing which trend has staying power, a disciplined framework systematically weighs companies on measurable traits tied to long-term performance (e.g., underlying profitability, cash-flow generation, and relative valuation metrics) rather than gut instinct or speculative hype.
When structural shifts occur, broad market weightings naturally adjust to those macroeconomic realities as they reflect on corporate balance sheets, rather than relying on an advisor attempting to predict the exact timing in advance.
You May Already Own More Than You Think
Your portfolio almost certainly has exposure to artificial intelligence, energy, and real estate already, both through companies built around those themes and through businesses across other industries whose results are shaped by them. Instead of a vote against these trends, the current weighting reflects how global markets are pricing risk and opportunity today. And that weighting moves as conditions do.
If you’d like to walk through how these themes show up inside your specific portfolio layout, our wealth management team can map it out with you, holding by holding.
Call (212) 221-1140 or email info@brwealth.com to schedule a conversation, or take a look at our wealth management services for more on how we approach portfolio construction.
Frequently Asked Questions
Does owning a diversified portfolio mean I’m missing out on AI’s growth?
Probably not. Many of the companies powering AI’s expansion, like chipmakers and cloud providers, already sit inside a broadly diversified portfolio, even when they aren’t labeled as AI stocks.
Why don’t my sector weights match what I see in the news?
Headlines tend to focus on the most talked-about companies in a trend, while index weightings reflect the full universe of businesses tied to that trend, sized by their actual earnings and market value.
Will my exposure to these sectors grow if the trend keeps expanding?
In a market-cap-weighted portfolio, yes. As a sector’s earnings and market value grow relative to the rest of the market, its weighting in your portfolio grows along with it, without any manual adjustment needed.
About Ted
Ted Stricker, CFP®, is a partner at Bernath + Rosenberg with over 27 years of experience specializing in custom financial plans for business owners and affluent families. Since joining the firm in 2015, he has led the wealth management team in delivering practical, independent advice tailored to each client’s unique lifestyle and goals. Based out of the firm’s multi-state offices, Ted is a member of the Financial Planning Association and helps maintain Bernath + Rosenberg’s standing as a top-ranked national CPA firm in financial planning.
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The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.
Investing involves risk, including loss of principal. No strategy assures success or protects against loss.
This information is not intended to be a substitute for individualized tax advice. We suggest that you discuss your specific tax situation with a qualified tax advisor.
There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.
Investments in real estate may be subject to a higher degree of market risk because of concentration in a specific industry, sector or geographical sector. Other risks can include, but are not limited to, declines in the value of real estate, potential illiquidity, risks related to general and economic conditions, stage of development, and defaults by borrower.
Investing in Real Estate Investment Trusts (REITs) involves special risks such as potential illiquidity and may not be suitable for all investors. There is no assurance that the investment objectives of this program will be attained.
