Rethinking portfolio design with sustainable AI and FinTech: dynamic spillovers in a quantile–frequency framework

This study examines the diversification benefits and systemic risk dynamics of sustainable digital technology assets, with a focus on artificial intelligence and FinTech assets. In an era where sustainability and innovation increasingly converge, we apply a quantile–frequency connectedness framework to assess regime-sensitive spillovers between ESG tech assets and traditional benchmarks from 2018 to 2025. Findings reveal asymmetrical systemic roles: sustainable AI indices act as short-term shock transmitters during bullish regimes. In contrast, ESG FinTech stocks and broad ESG indices serve as reliable shock absorbers in downturns. This divergence highlights the need for differentiated portfolio strategies across ESG tech sub-sectors. Notably, portfolios designed to minimize connectedness outperform traditional variance- and correlation-based approaches in terms of risk-adjusted returns, especially in volatile markets. These results underscore the financial relevance of incorporating ESG-themed technology assets into dynamic portfolio management. Beyond their sustainability profile, such assets enhance market resilience by mitigating contagion or capitalizing on favorable spillovers. This article is among the first to apply the quantile–frequency connectedness methodology to sustainable digital assets, providing new empirical insights into their asymmetric behavior and portfolio implications. The findings offer practical guidance for investors and policymakers shaping the future of sustainable digital finance.This study provides new insights into the systemic connectedness of sustainable digital assets and traditional markets using a quantile–frequency framework. The findings highlight how Sustainable Finance, FinTech, and AI-driven investments interact under different market conditions, offering investors and policymakers valuable guidance for risk management, portfolio diversification, and the design of sustainable financial strategies.