Navigating freefall: How AI keeps investments on course

Financial markets plunged into turmoil following President Trump's announcement of global import tariffs on April 2nd, triggering volatility across asset classes. Traditional investment strategies are struggling to adapt, but AI-driven portfolio management is rising to the challenge. While the S&P 500 lost -9.6% from April 1 to April 4, 2025, aisot's AI-driven balanced test portfolio would have made +0.2% over the same period, showcasing the strength of machine learning in navigating market uncertainty.

Adaptive asset allocation in a crisis

Our balanced test portfolio consists of the three largest market caps from the U.S., UK, Switzerland, and the EU, alongside Bitcoin, gold, midterm corporate bonds, and treasuries. With a maximum cash allocation of 49%, the AI Insights Platform dynamically adjusts exposure to manage risk and seize opportunities.

Recent market turbulence has underscored AI’s ability to:

• Identify defensive assets: The model has increased allocations to treasuries from 0% to 20%, corporate bonds  from 0% to 20% and cash from 0% to 49%, cushioning against equity drawdowns.
• Manage cash reserves efficiently: The AI maintains liquidity for tactical reallocation while reducing exposure to high-risk sectors.
• Exploit short-term volatility: By detecting patterns and momentum shifts, AI has optimized entry and exit points across asset classes.

AI’s predictive edge: the April 1st allocation

A striking example of AI’s foresight came on April 1st, 2025, just one day before President Trump’s tariff announcement. The AI Insights Platform suggested the following allocation:

• 49% U.S. dollar
• 20% SPDR Portfolio Intermediate-Term Treasury ETF
• 20% SPDR Portfolio Intermediate-Term Corporate Bonds
• 11% Nestlé

This AI-generated allocation was impressively defensive, positioning heavily in cash (USD) and safe-haven assets like treasuries and corporate bonds—right before Trump’s tariff announcement sent shockwaves through the market. The fact that Nestlé, a historically stable consumer defensive stock, made up the only equity position suggests the AI anticipated volatility and leaned toward capital preservation.

This highlights one of AI’s biggest advantages in investing: the ability to react to subtle market signals before major events unfold.

aisot's balanced AI-driven test portfolio (green line) would have gained 12% since October 2024, significantly outperforming the S&P 500, which is down 12% over the same period. (Past performance is no indicator of future performance.)

Outperformance in a market crash

While traditional strategies struggle with reactive adjustments, AI continuously analyzes market conditions, adapting in real time. This proactive approach would have allowed aisot’s AI-powered balanced test portfolio to stay ahead, proving that AI isn’t just a tool for bull markets—it’s a necessity in bear markets.

Besides outperforming during the most recent market crash, the test portfolio also remained stable during the COVID-19 market crash, further showcasing the power of AI-driven portfolios in times of extreme market distress. By dynamically reallocating assets and managing risk efficiently, the AI was able to navigate uncertainty and deliver superior results when markets were in turmoil.

aisot's balanced AI-powered test portfolio (green line, +1.2%) would have outperformed the S&P 500 (-9.7%) from February 1, 2020, to April 30, 2020. (Past performance is no indicator of future performance.)

The future of AI in investing

This latest stress test highlights AI’s ability to manage uncertainty more effectively than conventional models. As markets evolve, AI-driven portfolio management will become an essential strategy for investors seeking resilience and outperformance.

Are you a qualified investor and want to see how AI can optimize your investments? Book a demo today.