The HALO trade (High Assets, Low Obsolescence) reflects a shift in where investors are seeing opportunity. After years of digital-led gains, investors are increasingly complementing technology exposure with companies tied to physical assets and strategic resources. As investors rethink the long-term winners of artificial intelligence, money has moved towards companies with tangible, hard-to-replace assets. Rather than relying solely on asset-light digital businesses, investors are exploring companies that own infrastructure, networks, machinery, and productive capacity – especially those in Emerging Markets.
These assets often benefit from high entry costs, regulatory protections, and long economic lifespans. These characteristics may provide resilience amid higher interest rates, geopolitical fragmentation, and technological disruption. For investors with growth-heavy portfolios, HALO exposure may help balance AI-driven volatility with durable cash flows and the backing of real assets.
We see six areas that may be well positioned within the HALO trade.
1. Commodities
Materials like copper, uranium, and rare earths are foundational to electrification, infrastructure, and defense. Supply constraints and long project lead times can create durable pricing power for asset-intensive producers.
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2. Infrastructure Assets & Development
Bridges, roads, ports, utilities, and broadband networks require massive upfront investment and regulatory approvals, creating high barriers to entry. Government spending and reshoring initiatives improve multi-year demand visibility.
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3. Semiconductors and Data Centers
While software faces disruption risk, the physical backbone of AI – chip factories, advanced manufacturing equipment, and next-generation computing infrastructure – requires massive capital and engineering expertise, reinforcing durable moats. Data centers, for their part, often operate under multi-year contracts, potentially providing more predictable cash flows.
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4. Electrification
Power grids, transmission lines, transformers, and generation capacity are essential for EV adoption and AI data center expansion. These regulated or capital-intensive assets often operate under long-term regulatory or contractual frameworks that can support durable revenue streams.
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5. Defense
Defense contractors own specialized manufacturing capacity and benefit from long procurement cycles and national security priorities. Rising geopolitical tensions and sovereignty agendas may support sustained capital deployment.
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6. Emerging Markets
Many of these themes are prominent in Emerging Markets (EM), where commodity production, infrastructure buildout, electrification, and advanced manufacturing remain key drivers of growth. Exposure to countries such as Argentina, Brazil, and Colombia may provide access to energy, agriculture, and mining assets, while Taiwan and Korea offer critical semiconductor and industrial capacity. To balance growth with durability, investors may consider EM ex-China strategies or targeted country exposure.
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Conclusion
As markets place greater value on scarcity and strategic resources, hard assets appear to be moving back to center stage. As investors seek to balance purely digital growth with capital-intensive resilience, investors may find opportunities in commodities, infrastructure, defense, electrification, and Emerging Markets leadership.