Josh Sheluk and James Learmonth tell Wealth Professional why they refuse the all-in AI bet
“Our clients would never hold only an S&P 500 ETF in their TFSA or RRSP.”
Josh Sheluk, portfolio manager and chief investment officer at Verecan Capital Management, said as much in an interview with Wealth Professional, pushing back on a bet a growing number of investors are making on a US index now dominated by a handful of artificial intelligence (AI) names.
The math explains his caution.
The 10 largest companies made up nearly 41 percent of the S&P 500’s total weight at the end of 2025, more than double their share a decade earlier, according to RBC Wealth Management.
Sheluk said his firm is deliberately building around that index rather than through it, holding “exposures that are not AI dominant” by favouring global over US-only equities, all-cap over large-cap, a Canadian equity weighting of 15 to 20 percent, value tilts, and real estate.
Regulators see the same risk he does.
Sheluk reads Canada’s central bank as recognizing that “AI seems to be a singular theme driving so many data points,” from capital spending and economic growth to stock markets, bond issuance, and private credit, and he flagged cyber-security vulnerabilities in frontier AI models as a second concern.
In its 2026 Financial Stability Report, released May 28, the Bank of Canada introduced AI as a new category of financial-system risk, warning that heavy index exposure to a small group of large, AI-invested technology firms leaves markets open to an outsized correction if the sector stumbles.
The cost of that concentration is already visible in Canadian retirement money.
CPP Investments, which manages the Canada Pension Plan fund, returned 7.8 percent in its 2026 fiscal year and grew to $793.3bn, yet it trailed its own benchmark’s 13.2 percent return, a gap the fund attributed to that benchmark’s heavier exposure to large-cap technology and communication-services companies tied to AI.
The reference portfolio behind the country’s largest pension pool, in other words, beat the fund itself because it leaned harder into the AI trade.
Some managers are engineering the alternative into exchange-traded funds (ETFs).
Harvest ETFs, James Learmonth said in an interview with Wealth Professional, leans on equal weighting and quarterly rebalancing to blunt the pull of the biggest names.
Most strategies in the firm's Income Leaders suite "utilize an equally weighted approach with quarterly rebalancing," said Learmonth, co-chief investment officer and portfolio manager.
That structure "helps to reduce concentration in the largest mega-cap names," he said.
He has spent 2026 pushing a “tactical barbell approach,” balancing growth themes like AI against defensive positions in health care, consumer staples, and utilities.
The pull toward those mega-caps is not fading.
Top brokerages see the S&P 500 extending its rally through 2026, according to Reuters, with year-end targets running from 7,100 at BofA Global Research to 8,100 at Citigroup and Oppenheimer Asset Management, and JPMorgan lifting its call to 8,000 on AI-led earnings strength.
Learmonth tied the appetite for income strategies to the volatility around that trade, saying covered-call approaches let investors monetize some of it for monthly cash flow while keeping equity exposure as trade policy, inflation, and geopolitics keep markets choppy.
For investors already all-in on the index, Sheluk offers a history lesson.
Over the past 50 years, he said, the S&P 500 has endured stretches of up to a decade when it badly lagged Canadian or international markets, even as 15 years of strong US returns keep pulling money in.
“At some point, the recent outperformance of the S&P 500 will reverse, and investors who are more diversified will have a much more enjoyable and successful investment experience when it does,” Sheluk said.
