Constructing the ‘perfect’ UK stock market portfolio is a mighty challenge. I doubt it can be achieved with a one-size-fits-all combination of shares.
That’s because investing’s a personal matter. For instance, an investor seeking steady dividend income should consider different stocks from one chasing share price growth. Each individual’s ideal portfolio needs to be tailored to their unique goals and risk tolerance.
I was curious about how ChatGPT would attempt to solve this conundrum. Here’s what the artificial intelligence (AI) chatbot told me.
Should you invest £1,000 in BT right now?
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Allocation strategy
It started with clear objectives. The ‘perfect’ portfolio needs “diversification across different sectors and asset classes, balancing growth and stability“.
I’m a firm believer in diversification as a partial antidote against volatility risks and stock market crashes. So far, so good. My cognitive companion went further, proposing five investment categories with different portfolio weightings for our mystery investor.
| Investment | Portfolio percentage |
|---|---|
| Growth stocks | 30% |
| Dividend stocks | 30% |
| Value stocks | 20% |
| Defensive stocks | 10% |
| ETFs | 10% |
Stock market picks
ChatGPT’s sample choices almost exclusively came from the FTSE 100. AstraZeneca‘s first on the list, as a growth stock. For what it’s worth, when pushed for a response, my digital aide backs the pharma giant as the best UK stock to consider buying.
Dividend shares Diageo and Unilever make the cut while Lloyds Bank and British American Tobacco feature as value stocks. Up next, National Grid and Reckitt Benckiser reinforce the portfolio as defensive investments. Finally, exchange-traded funds (ETFs) tracking the FTSE 100 and FTSE All-Share indexes are the final portions of the pie.
I’m impressed. My AI assistant provided a credible, diversified mix of blue-chips and index funds. These FTSE 100 heavyweights aren’t immune to difficulties, but they’re plausible candidates for a ‘perfect’ UK stock market portfolio. I already invest in several of them.
Yet part of me feels underwhelmed. Collectively, these suggestions seem unimaginative, dare I say… robotic?
A surprising choice
Well, there was a bolder growth stock selection beyond the FTSE 100. That company was Wise (LSE:WISE), a UK-listed fintech specialising in global money transfers.
The market opportunity in cross-border currency services is huge. Worldwide, over 90 banking groups use Wise’s platform infrastructure, including challenger banks like Monzo.
Perhaps a real gamechanger for the Wise share price is whether the firm can attract a critical mass of financial institutions away from the antiquated Swift system for international payments. Undeniably, it has a competitive offering on efficiency and cost.
Plus, business is booming. Interim results confirmed that the tech company expanded active users by 25% and total underlying revenue climbed 19% to £662m.
That said, forex volatility could weigh on the transfer specialist’s profits amid Trump’s tariff threats. Furthermore, tax scandals surrounding CEO Kristo Käärmann and historic anti-money laundering probes into the firm damage confidence among investors and potential partners.
Unfortunately, those risks go to the heart of the growth opportunity, leaving me reluctant to invest today.
Last thoughts
I’d never blindly rely on a chatbot’s stock market tips, but they’re useful springboards for ideas. Overall, ChatGPT rose to my impossible challenge well, producing a balanced selection of FTSE 100 shares.
Still, I’m intrigued by the portfolio’s dark horse. Following my AI adventure, I’ll keep a close eye on Wise.
