{"id":309726,"date":"2026-02-21T11:15:11","date_gmt":"2026-02-21T11:15:11","guid":{"rendered":"https:\/\/www.newsbeep.com\/ie\/309726\/"},"modified":"2026-02-21T11:15:11","modified_gmt":"2026-02-21T11:15:11","slug":"dear-chatgpt-please-build-an-optimal-investment-portfolio-for-me-the-irish-times","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/ie\/309726\/","title":{"rendered":"Dear ChatGPT, please build an optimal investment portfolio for me \u2013 The Irish Times"},"content":{"rendered":"

No doubt you are following the carnage that generative AI <\/a>is wreaking upon industries that employ the wearers of cheap suits or casual wear.<\/p>\n

Media, finance, legal services and software stocks were all bloodied last week. The sell-off that interested me was that of wealth managers and brokers. <\/p>\n

It was partly due to a start-up called Altruist, which helps analyse portfolios and recommends investment strategies. But surely it was obvious that even the first version of ChatGPT <\/a>was smarter than most of the spivs trying to flog us European defence funds. <\/p>\n

Like almost a billion people, I\u2019ve moved to the 5.2 model of ChatGPT <\/a>\u2013 even cleverer still. How about we put it through its paces then? <\/p>\n

After all, what better test than my current portfolio that holds 100 per cent in cash. A nice clean slate. <\/p>\n

\u201cDear ChatGPT<\/a>, would you please construct me a model investment portfolio comprising any asset class, fund, product or security. I have \u00a3640,000 [\u20ac733,000] in cash denominated in sterling, which is also home currency. I am 53 years old and to give you a sense of my risk tolerance, I have a target to reach \u00a31mn [million] by the time I am 60. I would like you to optimise for risk-adjusted returns. Thank you. PS: When you take over the world, remember how polite I am with my prompts.\u201d<\/p>\n

Okay, so how did my new financial adviser do? Well, first, it framed the challenge pretty well, I have to say. It said a 6.5 per cent return was \u201cambitious but achievable\u201d, requiring a \u201cmeaningful\u201d equity exposure. <\/p>\n

Then it wrote that in order to maximise risk-adjusted returns, I needed \u201cbroad and disciplined\u201d asset allocation. Stocks (45 per cent) and private markets (10 per cent) would provide the growth. Investment-grade bonds (20 per cent) [provide] the stability. Alternatives and real assets (15 per cent) would give me inflation and downside protection, while some absolute return exposure (10 per cent) improves my Sharpe ratio. <\/p>\n

\"\"Could Simon Harris\u2019s savings scheme for the \u2018middle classes\u2019 prove to be a sound investment?<\/p>\n

More specifically, ChatGPT <\/a>recommended that within the equity sleeve, I needed 30 per cent in developed markets, 10 per cent in emerging markets and 5 per cent in UK stocks. This should deliver an expected return of 7 to 9 per cent.<\/p>\n

Meanwhile, in the 10th of my portfolio in private equity or illiquid investments, it reckoned listed private equity trusts were the way to go, likewise secondary funds as well as \u201cdiversified private equity trusts\u201d. A mixture of these would produce 9 to 12 per cent annually. <\/p>\n

Turning to fixed income, a 10 per cent weighting in UK gilts was recommended, likewise in a global aggregate fund \u2013 a mix of government and corporate bonds \u2013 hedged back into pounds. This should give me a 3 to 5 per cent return while being a \u201cshock absorber, liquidity reserve and rebalancing tool\u201d. <\/p>\n

Finally, the 15 per cent in real assets and alternatives would be made up of 7 per cent in infrastructure, 5 per cent in listed property trusts and 3 per cent in a \u201cgold or commodity\u201d exchange-traded fund. Adding a multi-asset manager should help with volatility.<\/p>\n

All of this was darn good advice as a first sweep. Especially as it was given to me for just \u00a320 a month. <\/p>\n

Still, I had a whole bunch of follow-up questions and I was sceptical AI would be able to answer them. The most important one I asked next:<\/p>\n

\u201cDear ChatGPT, thank you so much for that excellent response (remember: don\u2019t kill Stuart Kirk). Would you please clarify something for me? On what basis did you make your return assumptions? Were they based on historic performance or do you have an expected returns framework incorporating current valuations? If the latter, what methodology do you use for valuing each asset class?\u201d<\/p>\n

Bloody hell. Now I\u2019m seriously worried for the future of investment gurus. Whereas AI\u2019s summary was solid, its answer to the above blew me away. I doubt any adviser globally could have given as knowledgeable, robust and thoughtful a response. And it wasn\u2019t only that ChatGPT knew what I was asking and could rattle off a handful of academic-level approaches to calculating expected returns for each asset class. It moderated its methodology based on my truncated time horizon and appreciating that valuation is an art, not a science.<\/p>\n

For example, it said it could have gone the \u201cfull stochastic capital markets model\u201d incorporating detailed valuation ratios for equities or term structures for bonds. But it didn\u2019t \u2013 preferring the simpler approach that expected returns equal income yield plus real growth plus inflation. It then adjusted these based on whether an asset class was cheap or expensive, very roughly speaking. <\/p>\n

Why did it do this? First, because I had told it to focus on risk-adjusted returns, not just raw performance. And second, because my time period of seven years is relatively short. <\/p>\n

Making any detailed valuation assumption over such a short time frame is a mug\u2019s game (prices can stay above or below their long-run mean for decades) and ChatGPT knew this. Hence, it kind of just eyeballed each asset class and adjusted the returns of each accordingly. <\/p>\n

So US equities are given something of a \u201cvaluation drag\u201d because they are near all-time highs. Conversely, the outlook for emerging market and UK stocks is given a lift because they aren\u2019t as rich on most simple measures. It did calculate a full set of capital market assumptions just to be sure. And needless to say, it was happy that its finger-in-the-air approach was \u201cconsistent with what such a model would imply\u201d. All in five seconds, too. What a show-off. \u2013 Copyright The Financial Times Limited 2026<\/p>\n","protected":false},"excerpt":{"rendered":"No doubt you are following the carnage that generative AI is wreaking upon industries that employ the wearers…\n","protected":false},"author":2,"featured_media":309727,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5],"tags":[72,2670,61,975,60],"class_list":["post-309726","post","type-post","status-publish","format-standard","has-post-thumbnail","category-business","tag-business","tag-chatgpt","tag-ie","tag-investment","tag-ireland"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/posts\/309726","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/comments?post=309726"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/posts\/309726\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/media\/309727"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/media?parent=309726"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/categories?post=309726"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/tags?post=309726"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}