The president’s audacious firing of the head of the Bureau of Labor Statistics may not cause asset managers to mistrust government data — but much depends on who gets confirmed as successor for the agency.

President Donald Trump last week shocked economists, market watchers and the wider financial services world when he announced the firing of BLS head Erika McEntarfer (no small accomplishment amid rumors of a UFC fight on the White House lawn next year). Trump disputed revisions to recent jobs reports, which he claimed were manipulated for political purposes, despite citing no evidence. The announcement called into question the future independence of BLS data, and perhaps government data more widely, which could have implications for asset managers.

“It’s a potentially serious problem. It’s kind of surprising to me that the markets haven’t responded with the horror you would expect,” said Hal Ratner, head of research at Morningstar Retirement.

Revisionist History

It is common for the BLS to revise numbers in its reports, given that the initial figures are estimates based on early survey data. The changes it made Aug. 1 to jobs numbers in May, June and July dramatically cut the payroll numbers it reported earlier, representing the biggest revisions the agency had made to reports since 1968, Ratner noted in an analysis piece. However, the changes brought the figures in line with what economists had been predicting, as the tariffs had been expected to make employers uncertain in the near term and less likely to staff up, he said.

McEntarfer’s firing amounts to “shooting the messenger,” as the BLS has historically operated without political pressure, Que Nguyen, chief investment officer of equity strategies at Research Affiliates, said in a statement. “This is a culture and a process that has been embedded in the agencies that measure our economy. This culture is not easy to change.” Investors use a variety of indicators, especially given that initial BLS data are subject to revisions, Nguyen said.

BLS reports are critical to gauging inflation and setting rates:

• The jobs data help inform the Fed funds rate. Despite Trump’s claims about the revisions being rigged, the lower numbers help support a rate cut.
• The Consumer Price Index numbers released on Tuesday by the BLS showed annual inflation being relatively steady in July, at 2.7%.

Heritage Hire: On Monday evening, Trump announced on social media that he would nominate Heritage Foundation economist and Project 2025 contributor E.J. Antoni, who has been critical of the Fed and of BLS data, as McEntarfer’s replacement. Trump wrote that “our economy is booming, and E.J. will ensure that the numbers released are honest and accurate.” That statement isn’t the sentiment observers were hoping for, Ratner said. “Antoni is much more the political operative than the serious economist,” he said. “My hope is that he doesn’t clear Senate confirmation.”

Sure, not all AI companies are created equal, but they are all powered by the same infrastructure.

Several ETFs focused on the backbone of AI companies — cables, data storage systems, cooling devices and more — have popped up in recent months looking to cash in on the AI boom and the industry’s projected growth. The AI infrastructure sector is expected to surpass $350 billion by 2032, according to the market research firm Fortune Business Insights, an expansion experts say is noteworthy. “[It’s like] if you could go back in time and tell people, ‘Hey, would you like a slice of the internet?’ but you knew what the internet would be,” said Zeno Mercer, a senior research analyst at VettaFi. “Now you have companies that are actually highly profitable… and they have an angle on those various possibilities of where the world is heading.”

Laying the Groundwork

There are countless ways to invest in AI infrastructure, including energy and electricity companies and hyperscalers like Google and Meta, which build the large data centers that hold the information AI pulls from. There are also natural gas or nuclear power plants being built specifically to power those data centers. “You can invest in Meta, but just think about the millions of servers that need to be in that data center — companies like Dell, Cisco and other server makers are going to be selling off the servers to them,” said Rob Thummel, managing director at Tortoise Capital, which launched its own AI infrastructure ETF last week. “[Data centers] need millions and millions of data storage devices, so companies like Stargate and Western Digital will be providing a lot of that.”

Other ETFs with exposure to AI infrastructure include:

• The iShares AI Infrastructure UCITS ETF (AINF), which launched late last year and tracks semiconductor companies, cloud computing software and big data technologies.
• The Defiance AI & Power Infrastructure ETF (AIPO), which launched last month and invests in the electrical grid, data centers and the AI hardware sector.

Investors who want exposure should generally allocate roughly 5% to 10%, Mercer said, but they should avoid overweighting the biggest players. “We had 20-plus years of American tech imperialism,” he said. “But there is a chance now for companies worldwide that were dependent on us to be like, ‘Hey, we actually can make this ourselves a lot easier.’”

Where’s My Data? Data centers are about to become a nationwide phenomenon, too, having been clustered until now in northern Virginia and Silicon Valley. Thummel said other regions, ranging from Kansas City to Columbus, Ohio, are being considered because local and state governments — seeing the business opportunity — are offering builders tax exemptions. “This AI thing is growing pretty rapidly, and you’re going to need lots of different locations to build your facilities,” Thummel said. “AI can’t run on code alone.”

Fund managers are not optimistic about the US market: A record 91% said in a recent survey that stocks are overvalued.

That doesn’t mean that they’re exiting equities, Bank of America found in its August Global Fund Manager Survey. Cash allocations are at a low 3.9% of assets under management, and equity allocations are trending upward. On average, fund managers are 14% overweight on global equities, according to the report, and advisors told ETF Upside that the findings are hardly an indictment of the US stock market in its entirety.

“If history has taught investors anything, it’s that ‘the market’ is rarely the monolith we make it out to be,” said Patrick Huey, owner of Victory Independent Planning.

Did I Break Your Concentration?

A culprit behind the overvaluation is the Magnificent Seven, whose members make up only a fraction of publicly traded companies but have outsized market caps. Market cap weighting, consequently, is skewing averages higher, and big tech firms may represent less of a value than, as Huey said, “more reasonably priced” public companies. “Those tech titans now make up nearly 30% of the S&P 500’s market capitalization,” he said. Another advisor, Thomas Rindahl, of TruWest Wealth Management Services, noted that “cap weighting of indices can lead to a disproportionate influence and dependence upon the performance of a few companies, which ultimately leads to market vulnerability, if not bubbles.” Of course, this story is not entirely new, and there has been more attention to equal-weight or capped-weight index ETFs recently.

A couple of those ETFs show the categories’ benefits and limitations:

• The iShares S&P 500 3% Capped ETF (TOPC), which launched earlier this year, gives an alternative to the top-heavy index, though its top holdings are still the same big names — Nvidia, Apple, Microsoft, etc. — that are at the top of market-cap weighted funds.
• The Invesco S&P 500 Equal Weight ETF (RSP) has the benefit of diversification, giving the same weight to every stock, but it has relatively high turnover and volatility, according to a Morningstar analysis.

What, Me Worry? Concentration risk is a cause of anxiety among clients, but so are things like algorithmic trading and the political environment’s effect on portfolios, Huey said. “Beneath it all is the timeless fear of the unknown. Our response is grounded in time-tested principles: Diversify beyond the headline-makers. Stick to a long-term plan.”