Macro Markets and Machines_The Economic and Market Transformation Driven by AI_GWM report - Flipbook - Page 19
Macro, Markets, and Machines
November 2025
As such, we believe investors would be served well by maintaining exposure to fixed income. Elevated rates
provide attractive yields, while bonds continue to serve as a portfolio stabilizer should growth or risk sentiment
falter. If AI-related productivity gains begin to feed through and inflation moderates, declining rates will enhance
fixed income’s total return potential and bolster its diversification benefits. Of course, as previously mentioned, if
the neutral rate and yields are biased higher due to technological innovation that results in higher output
potential, duration exposure will need to be managed carefully.
Alternative assets also warrant attention in this environment. The infrastructure underpinning AI, like data
centres, utilities, and energy systems, represents a multi-year capital cycle that could benefit investors with
exposure to real assets and commodities. Infrastructure and renewable energy investments may offer both
inflation protection and participation in the physical side of the AI economy.
Ultimately, while AI presents a compelling growth story, the appropriate investment response is not
overconcentration; rather, it is diversification. The future path of AI adoption, regulation, and productivity is
uncertain, and markets rarely price technological revolutions smoothly. A balanced allocation across equities,
fixed income, and alternative assets ensures that portfolios remain resilient across scenarios: Participating in the
upside of innovation while being protected if the journey proves volatile. Put another way, investors should
embrace the opportunity that AI presents – but do so through disciplined diversification rather than speculation.
Scotia Wealth Management
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