A number of institutional investors and wealth managers are voicing concerns over companies exaggerating their use of AI —a trend referred to as “AI washing.”
Research from Robocap, a fund manager in robotics, automation and AI-listed equities, has shown that 37% of institutional investors, including pension funds, insurance asset managers, family offices and wealth managers, are “very concerned” about misleading AI claims. Another 63% said they are “quite concerned”.
AI washing takes several forms, according to the findings. Some companies label basic data analytics or rule-based software as “AI,” while others exaggerate how advanced or effective their AI systems truly are. According to the findings, firms claim their AI tools are live and delivering results, when in fact, they are not operational at all.
About 26% of those surveyed believe AI washing will become slightly more prevalent over the next three years, with 3% expecting it to worsen significantly. 64% are more optimistic, believing the issue will ease over time, while 7% expect no change.
AI-driven, human-centric design
Robocap, which has managed the Robocap Ucits Fund since 2016, focuses on “pure play” investments —companies with at least 40% of their revenue derived from robotics, automation or AI. Its current portfolio reflects a higher threshold, with 85% of revenue directly tied to these sectors.
Since its inception, the Robocap Ucits Fund has achieved an annualised return of 11.84%, with a net gain of 181%. Its long-term strategy aims for a 12% return per annum across the economic cycle, driven by its disciplined focus on innovation-driven companies genuinely embedded in the AI ecosystem.
In total, the respondents manage a collective $1.183 trillion in assets. Jonathan Cohen, founder and CIO at Robocap, said: “Just like greenwashing, AI washing is a genuine problem for investors who are looking for exposure to companies that genuinely profit from the growth and operational efficiencies AI can bring. We believe there is a strong misunderstanding and a misuse of the term AI, a great disparity between the technological innovation and what we actually see in terms of revenues derived from it.When selecting investment opportunities, we look for companies with a good underlying exposure to the AI, robotics and automation theme, a strong business model backed by excellent technology, a good management team and at a compelling valuation.”
