Navigating the AI Correction: Strategic Allocation in November's Top Performing Sectors

As markets realign in November 2025, a stark divergence has emerged between sectors. While artificial intelligence (AI)-linked stocks and cryptocurrency ETFs grapple with valuation pressures and outflows, gold, healthcare, and biotech funds have surged, offering a compelling case for portfolio rebalancing. This analysis examines the drivers behind these trends and outlines actionable strategies to hedge risk while capitalizing on resilient asset classes.

The Outperformers: Gold, Healthcare, and Biotech

Healthcare and Biotech Resilience
The healthcare and biotech sectors have emerged as standout performers, with ETFs like the Virtus LifeSci Biotech Clinical Trials ETF (BBC) and the iShares MSCI Philippines ETF (EPHE) gaining 6.7% and 7.7%, respectively, in November 2025. This outperformance is underpinned by a confluence of factors: cheaper valuations relative to other growth sectors, optimism around rate cuts, a surge in FDA approvals, and robust deal activity. According to a report by Trustnet, the average fund in the IA Healthcare sector rose 7.2% over the month, while IT Biotechnology & Healthcare trusts gained 7.3% according to Trustnet data. These figures highlight a sector increasingly viewed as a safe haven amid macroeconomic uncertainty.

Gold's Rally: A Hedge Against Uncertainty
Gold ETFs have also captured investor attention, with nearly $1 billion in inflows during November 2025, bringing year-to-date inflows to a record $42 billion. The iShares Physical Gold ETC GBP, which tracks the spot price of gold, returned over 50% in a 12-month period, reflecting strong demand for portfolio diversification amid geopolitical risks and lower bond yields. Analysts at Gold.org note that global gold ETF trading volumes spiked to $561 billion per day in October 2025, a 45% month-over-month increase. This surge underscores gold's enduring role as a counterbalance to equity volatility.

The Underperformers: AI and Crypto ETFs

AI Stocks: Valuation Concerns and Infrastructure Costs
AI-linked equities have faced headwinds, with technology sector funds experiencing significant outflows in November 2025. The sector's struggles stem from concerns over overvaluation and the exorbitant costs of AI infrastructure, which have dampened investor enthusiasm. As stated by a Morningstar report, the WisdomTree Artificial Intelligence UCITS ETF saw declining performance amid these pressures. The broader tech sector's underperformance signals a correction in speculative bets that had driven much of the summer rally.

Crypto ETFs: A Record Exodus
Cryptocurrency ETFs have fared even worse, with U.S.-listed spot Bitcoin ETFs recording a record $3.79 billion in redemptions during November 2025. BlackRock's iShares Bitcoin Trust ETF (IBIT) and Fidelity's Wise Origin Bitcoin Fund were the largest contributors, with $2.47 billion and $1.09 billion in outflows, respectively. Notably, IBIT alone saw a $523 million single-day outflow on November 18, marking its worst performance since its January 2024 launch. This exodus coincided with Bitcoin's price collapse from an all-time high of $126,000 in October to $84,000 by late November, triggering a broader selloff in digital assets.

Strategic Allocation: Balancing Risk and Opportunity

1. Reallocate to Defensive Sectors
Investors should consider increasing exposure to healthcare and biotech ETFs, which have demonstrated resilience amid macroeconomic volatility. These sectors benefit from structural tailwinds, including demographic trends and regulatory tailwinds, making them attractive for long-term portfolios.

2. Hedge with Gold
Gold ETFs offer a liquid and accessible way to hedge against equity market corrections. With year-to-date inflows already setting records, allocating a portion of portfolios to gold can provide downside protection, particularly as geopolitical tensions persist.

3. Diversify Crypto Exposure
While Bitcoin ETFs have underperformed, newer altcoin ETFs have attracted inflows, suggesting a shift in investor preferences. A cautious, diversified approach to crypto exposure may allow investors to participate in niche opportunities without overexposing themselves to the volatility of Bitcoin.

4. Monitor AI Sector Fundamentals
For those holding AI-linked assets, a focus on companies with strong cash flows and scalable infrastructure may mitigate risks. Avoiding speculative plays in favor of firms with proven business models could position portfolios to benefit from the sector's eventual recovery.

Conclusion

November 2025 has underscored the importance of adaptability in portfolio management. As AI and crypto ETFs face corrections, gold, healthcare, and biotech funds have emerged as resilient alternatives. By rebalancing toward these sectors and adopting a disciplined approach to risk management, investors can navigate current market dynamics while positioning themselves for future growth.