One of the market’s hottest trades is everything AI can’t replace
Investors are shifting their focus to companies that are less likely to be disrupted by artificial intelligence, leading to the emergence of the HALO trade. HALO, which stands for “heavy assets, low obsolescence,” was introduced by Josh Brown, CEO of Ritholtz Wealth Management, highlighting the importance of investing in companies immune to AI disruption.
Goldman Sachs and Morgan Stanley have embraced the HALO concept in their investment research, with HALO stocks performing well in 2026. Companies like FedEx, ExxonMobil, and Coca-Cola have seen significant gains since the beginning of the year, reflecting the success of the HALO trade.
HALO companies share common traits, according to Dave Mazza, CEO of Roundhill Investments. These companies rely on substantial physical assets to generate revenue and are known for their durability. While AI may change how work is done at these companies, it does not eliminate the need for their services. For instance, industries like electricity, manufacturing, and transportation require physical infrastructure that AI cannot replace.
To capitalize on the HALO trend, Roundhill Investments launched the Roundhill Halo ETF (LOHA), tracking an index of U.S. companies with a focus on physical assets and infrastructure. Top holdings in the ETF include companies like Cummins, AutoZone, TFI International, CSX, JB Hunt, and Lennox, some of which have been in operation for over a century.
Josh Brown, who joined Roundhill on a limited advisory basis, emphasized that the HALO ETF is not a bet against AI but a strategic investment in companies resistant to AI disruption. By avoiding the most disruptible companies and focusing on those that are AI-resistant, investors can navigate the changing landscape of the market.
Roundhill Investments recently experienced success with the launch of its Memory ETF (DRAM), which quickly attracted $9.8 billion in assets, becoming the fastest-growing ETF. Despite concerns about thematic trades reaching their peak, Mazza believes that launching new ETFs provides investors with access to previously untapped opportunities in the market.
Overall, the HALO trade represents a shift towards investing in companies with tangible assets and strong infrastructure, highlighting the importance of diversifying portfolios to withstand technological changes. By staying informed about emerging trends like HALO, investors can make strategic decisions to navigate the evolving market landscape.
