Investors are worried that AI will wipe out all companies, so they are moving to companies that AI will have a hard time disrupting. And the so-called HALO trade is working.
HALO, which stands for “heavy assets, low obsolescence,” was coined in February by Josh Brown, co-founder and CEO of Ritholtz Wealth Management, and is premised on the idea that in an era of rapid AI disruption, investors need to look for companies that are immune to it. In Brown’s view, this is one of the most important investment trends of the year.
Goldman Sachs and Morgan Stanley say they will include HALO in their 2026 investment research due to the overall strong performance of HALO stock. Some of the stocks Brown mentioned are examples: FedEx and ExxonMobil are both up nearly 30% since the beginning of the year, and Coca-Cola is up nearly 17%.
According to Dave Mazza, CEO of Roundhill Investments, HALO companies have two characteristics. Round Hill Investments launched a HALO-themed ET last week. These stocks require meaningful hard physical assets to generate returns and are durable. According to an article he wrote on the subject, AI may change the way jobs are done in less obsolete companies, but it won’t eliminate the need to work there. For example, electricity must flow and goods must be produced.
The Round Hill Halo ETF (LOHA) was launched on Thursday. The fund tracks an index of the largest publicly traded companies in the U.S., from industries to transportation to mining, that identifies companies whose value is concentrated in physical assets and infrastructure that cannot be replaced by AI.
“There’s nothing you can put into LLM that would change what LLM does, at least not in a negative way. They’re all probably benefiting from AI,” Brown said of the new ETF on CNBC’s “Halftime Report” on Thursday.
He learned that Roundhill was developing a product and joined Roundhill as a limited advisor. “I talked to them right after they filed the lawsuit, and I said we can do a deal together, or maybe we can litigate. I don’t know, what do you want to do?” Brown said. He added that he has known the company’s founders for many years.
Major stocks in the LOHA ETF include Cummins, AutoZone, TFI International, CSX, JB Hunt, and Lenox. “Some of them are 100 years old,” Brown said, adding that this represents a remarkable flipside of an increasingly prominent part of the market, with companies like Adobe, ServiceNow and Salesforce falling to 52-week lows while investors reassess software companies’ exposure to AI disruption.
Round Hill recently launched its memory ETF (DRAM) on April 2nd to great acclaim, reaching $9.8 billion in total assets in 43 days, according to VettaFi, the fastest time ever for an ETF. Although the fund is up 85% since its inception, Mazza pushed back against the idea that the ETF’s launch is somehow a sign of a high for thematic trading. “I think it’s a little bit easy to say just because you’re launching an ETF, that means you’re done trading,” Mazza said on “Halftime Report.”
“I actually think it’s really unlocking the potential for investors to have access to stocks that they didn’t have before,” he said.
Brown said Round Hill’s new HALO-themed ETF is not a bet against AI, but a way to continue investing in a world that is being transformed by AI. “Don’t invest in the most disruptive companies. Look for companies that are strong in AI,” he said.
Beyond the Livestream Sign up for our weekly newsletter for an in-depth look at the trends and numbers shaping the ETF market.
Disclaimer
