Physical AI
Self-driving cars are more energy efficient.
Is AI the key to sustainable growth in equities?
Outperformance thanks to – and not despite – sustainability: this remains the goal of Swisscanto’s global equities strategy. Portfolio managers Dr Gerhard Wagner and Philipp Mettler now reveal where they are finding exciting investment opportunities despite political headwinds. The focus is on a key topic that is currently on everyone’s lips
Authors: Dr Gerhard Wagner and Philipp Mettler
Three key points on sustainable investments in global equities:
- Since the beginning of the year, sustainable growth themes, particularly the energy transition through electrification, have once again delivered strong performance.
- The rapid development of artificial intelligence (AI) is proving to be the key to sustainable growth in returns in global equity markets.
- Companies that offer above-average growth potential and quality in light of AI opportunities are currently found primarily in the IT, industrial, and, in the medium term, pharmaceutical sectors.
Already in the second half of 2025, surprising developments were observed in the stock markets: sustainable investments are making a comeback. This was particularly evident in stocks that benefit from the energy transition through electrification. Despite a US president promoting fossil fuels, the structural trend towards decarbonisation remains unbroken.
Global Equities: Sustainable growth themes with strong momentum
Since the beginning of the year, sustainable growth themes, as identified in the Swisscanto strategy for global equity markets, have once again demonstrated strong momentum. In January, this allowed the benchmark – the global equity index MSCI World – to be outperformed by 1.3 percentage points, with a gross performance of 2.2%.
In our view, achieving continued excess returns requires both active stock selection and a strict focus on quality. We rely on the proven expertise of our specialists and the guidelines of the proprietary “Sustainable Purpose & Quality” (SPQ) approach (see box below). Over the past ten years, the strategy has significantly outperformed the MSCI World before costs.
It should be noted that past performance is not indicative of future returns.
What is the “Sustainable Purpose & Quality” approach?
The sustainable Swisscanto strategy for global equity markets follows the proprietary Swisscanto SPQ approach. At its core, the selected companies must not only demonstrate above-average growth potential but also exhibit high quality. This means that their return on capital exceeds their cost of capital, their balance sheets are healthy, and their management teams are convincing. In our view, only this combination can generate a rising “intrinsic value” for investors over the long term.
In portfolio construction, two-thirds of the positions are allocated to so-called SDG leaders. These are companies whose services can make a positive contribution to achieving the 17 UN Sustainable Development Goals (SDGs). The remaining third of the portfolio is invested in so-called ESG leaders. These are companies that provide their products and services while taking into account environmental, social, and governance factors. The ESG leaders in the portfolio serve to reduce risks compared to the benchmark and to ensure that these risks stem from stock selection.
Compared to the MSCI World, the approach allows for a balanced positioning in terms of market sectors, regions, and equity styles.
Building on this foundation, we are now focusing on several sustainable growth themes for the coming months – with the boom in artificial intelligence (AI) currently emerging as a key theme.
AI and sustainable equity investments: The focus is shifting
What’s exciting is that the focus is increasingly shifting beyond AI infrastructure and models to applications. In our view, investors should not only keep an eye on producers of high-performance chips and operators of data centres for AI computation. Equally attractive, in our opinion, are applications such as those in medicine for tumour detection or the development of new drugs (see graphic below). From a sustainability perspective, the efficiency gains offered by AI applications are particularly noteworthy: for example, physical AI in self-driving vehicles – or predictive AI that supports “load-shifting” in power supply.
Selected applications of AI for sustainable development:
Source: IEA, World Energy Outlook Special Report: Energy and AI, April 2025
In our view, AI and its applications could become the key to sustainable growth in the following sectors:
- Industry: Upstream to the AI boom and crucial for electrification
The data centres required for AI computation are energy-hungry and are likely to become even more significant drivers of global electricity demand. According to estimates by the International Energy Agency (IEA), electricity demand could double or even triple by 2050. This demand for electricity is likely to grow faster than the global economy. From a sustainable investment perspective, this is interesting for several reasons. Electrification can promote decarbonisation through renewable energy and greater energy efficiency. Furthermore, electrification promises to reduce dependence on fossil fuels, thereby enhancing energy security.
Examples of companies: Industrial groups such as the French Schneider Electric, the German Siemens Energy, or the Italian Prysmian are, in our view, well-positioned to benefit from this development.
- IT: Semiconductor producers’ stocks at the heart of the AI boom
The massive investments by major cloud computing operators (hyperscalers) such as Google, Amazon, Microsoft, and Oracle have recently raised concerns about a potential bubble. In contrast, areas within supply chains have emerged where there is a significant demand overhang.
Examples of companies: These include the semiconductor industry, where our focus is primarily on providers such as the US company Micron and the South Korean corporations Samsung and SK Hynix. Also worth mentioning is the Taiwan-based high-performance chip producer TSMC, whose capacities are likely to remain fully utilised for a long time.
- Healthcare: The avant-garde in downstream AI applications
The adoption rate of AI in the healthcare sector is evident in the development of paid licenses for AI applications over the past two years, particularly in comparison to the overall market and the entire US economy. The pharmaceutical industry, in particular, shows a high willingness to invest in AI technologies, hoping that these could create significant added value for the sector, as we have already discussed.
Examples of companies: Just a few weeks ago, the US chip manufacturer Nvidia and the American pharmaceutical giant Eli Lilly announced the establishment of a joint biotech lab. Experts from both companies will collaborate there to accelerate and improve the development of new drugs.
In line with this focus, the Swisscanto strategy for global equities currently overweights the IT, industrial, and healthcare sectors.
Our conclusion regarding AI and the prospect of achieving sustainable growth in equities:
In our opinion, AI could play a key role in sustainable growth in the coming months, which is likely to be reflected in global equity markets. Our focus is increasingly on AI applications and their potential. To achieve excess returns compared to the global equity index MSCI World, we consider active stock selection, a consistent focus on quality, and risk management to be crucial.
Funds in focus
Funds in focus
Legal disclaimer Switzerland
Legal disclaimer Switzerland
This document only serves advertising and information purposes, is for distribution in Switzerland only and is not directed at persons in whose nationality or place of residence prohibit access to such information under applicable law. Where not indicated otherwise, the information concerns the collective investment schemes under the law of Luxembourg managed by Swisscanto Asset Management International S.A. (hereinafter "Swisscanto Funds"). The products described are undertakings for collective investment in transferable securities (UCITS) within the meaning of EU Directive 2009/65/EC, which is governed by Luxembourg law and subject to the supervision of the Luxembourg supervisory authority (CSSF). This document does not constitute a solicitation or invitation to subscribe or make an offer to purchase any securities, nor does it form the basis of any contract or obligation of any kind. The sole binding basis for the acquisition of Swisscanto Funds are the respective legal documents (management regulations, sales prospectuses and key information documents (PRIIP KID), as well as financial reports), which can be obtained free of charge at https://products.swisscanto.com as well as at Swisscanto Fondsleitung AG, Bahnhofstrasse 9, CH-8001 Zurich (also acting as representative of the Luxembourg Swisscanto funds in Switzerland) or in all offices of Zürcher Kantonalbank. Paying Agent for the Luxembourg Swisscanto funds in Switzerland is Zürcher Kantonalbank, Bahnhofstrasse 9, CH-8001 Zurich. Information about the sustainability-relevant aspects in accordance with the Regulation (EU) 2019/2088 as well as Swisscanto's strategy for the promotion of sustainability and the pursuit of sustainability goals in the fund investment process are available on the same website. The sub-fund referred to in the document is subject to Article 9 of Regulation (EU) 2019/2088. The distribution of the fund may be suspended at any time. Investors will be informed about the deregistration in due time. The investment involves risks, in particular those of fluctuations in value and earnings. Investments in foreign currencies are subject to exchange rate fluctuations. Past performance is neither an indicator nor a guarantee of future success. The risks are described in the sales prospectus and in the PRIIP KID. The information contained in this document has been compiled with the greatest care. Despite professional procedures, the correctness, completeness and topicality of the information cannot be guaranteed. Any liability for investments based on this document will be rejected. The document does not release the recipient from his or her own judgment. In particular, the recipient is recommended to check the information for compatibility with his or her personal circumstances as well as for legal, tax and other consequences, if necessary, with the help of an advisor. The prospectus and PRIIP KID should be read before making any final investment decision. The products and services described in this document are not available to U.S. persons under the relevant regulations (in particular Regulation S under the U.S. Securities Act of 1933).
Data as at (where not stated otherwise): 11.2024
© Zürcher Kantonalbank. All rights reserved.
Legal disclaimer international
Legal disclaimer international
This document only serves advertising and information purposes and is not directed at persons in whose nationality or place of residence prohibit access to such information under applicable law. Where not indicated otherwise, the information concerns the collective investment schemes under the law of Luxembourg managed by Swisscanto Asset Management International S.A. (hereinafter "Swisscanto Funds"). The products described are undertakings for collective investment in transferable securities (UCITS) within the meaning of EU Directive 2009/65/EC, which is governed by Luxembourg law and subject to the supervision of the Luxembourg supervisory authority (CSSF).
This document does not constitute a solicitation or invitation to subscribe or make an offer to purchase any securities, nor does it form the basis of any contract or obligation of any kind. The sole binding basis for the acquisition of Swisscanto Funds are the respective published legal documents (management regulations, sales prospectuses and key information documents (PRIIP KID), as well as financial reports), which can be obtained free of charge at https://products.swisscanto.com/. Information about the sustainability-relevant aspects in accordance with the Regulation (EU) 2019/2088 as well as Swisscanto's strategy for the promotion of sustainability and the pursuit of sustainability goals in the fund investment process are available on the same website. The sub-fund referred to in the document is subject to Article 9 of Regulation (EU) 2019/2088.
The distribution of the fund may be suspended at any time. Investors will be informed about the deregistration in due time. The investment involves risks, in particular those of fluctuations in value and earnings. Investments in foreign currencies are subject to exchange rate fluctuations. Past performance is neither an indicator nor a guarantee of future success. The risks are described in the sales prospectus and in the PRIIP KID. The information contained in this document has been compiled with the greatest care. Despite professional procedures, the correctness, completeness and topicality of the information cannot be guaranteed. Any liability for investments based on this document will be rejected. The document does not release the recipient from his or her own judgment. In particular, the recipient is recommended to check the information for compatibility with his or her personal circumstances as well as for legal, tax and other consequences, if necessary, with the help of an advisor. The prospectus and PRIIP KID should be read before making any final investment decision.
An overview of investors' rights is available at https://www.swisscanto.com/int/en/legal/summary-of-investor-rights.html.
The products and services described in this document are not available to U.S. persons under the relevant regulations (in particular Regulation S under the U.S. Securities Act of 1933). Data as at (where not stated otherwise): 11.2024
© Zürcher Kantonalbank. All rights reserved.
