Behind the AI frenzy, retail investors quietly rotate into diversification and cash‑like funds

Fresh data from a major UK retail brokerage show how individual investors reacted to the turbulence in artificial‑intelligence stocks in July. While many clients continued to buy the dip in large US tech names, the most popular fund choices were global equity index trackers and money‑market funds that invest in short‑term government and high‑quality corporate debt. The Nasdaq 100 slid more than 6% over the month as doubts emerged about whether massive AI‑related capital spending would deliver commensurate profits, triggering sharp swings in share prices. In response, retail investors diversified: alongside big tech, they added positions in stocks such as Rolls‑Royce and defence contractors, which are seen as more resilient to economic and geopolitical shocks. The trend points to a growing desire to avoid an “all‑in on AI” portfolio by spreading risk across regions and sectors while maintaining a sizeable cash‑like buffer that can be redeployed quickly. For Japanese households watching global markets from afar, this behaviour underscores the appeal of simple global index funds and low‑risk short‑term bond funds as building blocks for long‑term wealth, rather than chasing every hot theme.