Podcast: The appeal of the HALO trade

HALO trade: Why hard assets are the new gold for sustainable investors

Question:

What is the HALO trade, and why are asset-heavy companies suddenly attracting investor attention in the age of AI and decarbonisation?

Short answer:

The HALO trade (Hard Assets, Low Obsolescence) is reshaping investment strategies. According to Dierdre Cooper, companies tied to physical infrastructure (like grids, pipelines, and industrial equipment) are seeing renewed growth as AI drives demand for electricity and hard assets. Unlike asset-light sectors threatened by automation, these companies are essential for electrification and climate solutions. Investors who focus on this theme may benefit from attractive valuations and strong growth, especially as decarbonisation and electrification accelerate globally.

Why it matters:

For sustainable investors, the HALO trade highlights a shift from tech and asset-light stocks to companies with tangible, enduring value. Understanding this trend means recognising the importance of infrastructure, energy storage, and electrification in a world increasingly powered by AI and climate technology. Missing this shift could mean missing out on the next wave of growth and resilience in global portfolios.

Sources:

• Michelle Baltazar, executive director of media, FS Sustainability

• Dierdre Cooper, head of sustainable equity, Ninety One

• Ninety One Global Environment strategy

• Companies: Contemporary Amperex Technology Co., Limited (CATL), Hongfa Technology, Shaman Electric Co., Limited, Infineon Technologies, TE Connectivity

• Industry context: MSCI All Country World Index, decarbonisation trends

Timestamps:

00:00 Asset-heavy companies and electrification

00:29 HALO trade explained

01:24 Ninety One's sustainable investing approach

03:15 Global environment strategy vs traditional equity

06:11 AI, asset-light vs asset-heavy sectors

08:32 Data centres and electricity demand

11:30 PE multiples and growth outlook

13:13 Market cycles and investor sentiment

14:28 Electricity as "all of the above" solution

17:25 Exciting trends for the next decade

19:52 Autonomous robots and electrification

20:42 Risks and selectivity in thematic investing

21:33 Wrap-up and final thoughts

We record on Gadigal Land and we pay our respects to the traditional custodians of country and elders past and present.

https://www.fssustainability.com.au/