HALO trade explained: Goldman's tangible assets call and why Europe is central

Goldman's Europe note contends that close to 40% of the MSCI Europe index falls within sectors it classifies as asset-heavy and low-obsolescence, such as energy, materials, regulated utilities, capital goods and certain semiconductor stocks, providing the region with a structural lean toward that investment theme. The note additionally highlights Germany's fiscal push as a possible 50 to 60 basis point boost to GDP via defense, energy transition and infrastructure spending, a notable figure given German GDP growth of just 0.2% in 2025. Goldman positions the opportunity as increasingly one for stock selection rather than a blanket sector re-rating, reflecting the wide divergence in balance sheet strength and pricing power among capital-intensive companies. The bank has also applied the same approach to emerging markets, indicating that HALO is developing into a framework that spans regions rather than remaining a Europe-specific trade.

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A phrase introduced outside Goldman in February has since become the bank's own method for wagering on tangible, hard-to-copy assets, and its most recent report argues that Europe is where that wager proves most effective.

Summary:

• Goldman Sachs Research deployed its "HALO" framework, which stands for Heavy Assets, Low Obsolescence, to European equities, arguing that the region's sector mix and policy conditions make it a solid match for the idea.
• Goldman approximates that energy, materials, regulated utilities, capital goods and select semiconductor names constitute roughly 40% of MSCI Europe.
• The report points to Germany's fiscal impulse as a possible 50 to 60 basis point contribution to GDP from defense, energy transition and infrastructure outlays, set against 2025 German GDP growth of merely 0.2%.
• Goldman's argument rests on three foundations: a "security premium" attached to energy, water and commodity access, the rarity and slow duplication of physical assets that support AI build-out, and broad performance divergence that rewards active stock picking over passive investing.
• Goldman lists five primary sectors for the theme: infrastructure, basic materials, aerospace and defense, manufacturing, and technology's physical layer.
• The HALO term did not start at Goldman. Ritholtz Wealth Management CEO Josh Brown introduced it in a Substack post dated February 8, 2026, and Goldman strategists Guillaume Jaisson and Peter Oppenheimer released their own framework around it 16 days later, on February 24.

Goldman Sachs Research has turned its "HALO" investment framework onto European equities, arguing that the continent's sector composition and policy setting make it an obvious candidate for a theme centered on heavy, hard-to-replicate physical assets. In a report called "Securing the Tangible Future: The Active HALO Playbook," the bank's strategists argue that years of asset-light dominance in global markets are yielding to renewed interest in the tangible economy, pushed by geopolitical fragmentation, the physical build-out of artificial intelligence infrastructure and the energy transition.

HALO is short for Heavy Assets, Low Obsolescence, a label for companies that own expensive, difficult-to-copy physical capital that remains economically relevant across technology cycles, think power grids, pipelines, utilities and long-cycle industrial capacity. Goldman's report argues Europe stands out within the global theme for two reasons: its market tilts toward "old economy" sectors, with energy, materials, regulated utilities, capital goods and select semiconductor names making up approximately 40% of MSCI Europe, and Germany's fiscal impulse could add an estimated 50 to 60 basis points to GDP through defense, energy transition and infrastructure spending, a substantial lift given German GDP expanded only 0.2% in 2025.

The bank outlines three structural shifts behind its conviction.

• First, access to energy, water and commodities has shifted from a routine procurement matter to a national security concern, favoring companies that own the grids, pipelines and fabrication plants involved.
• Second, the physical assets that underpin AI infrastructure are inherently scarce and slow to construct, which the bank argues shields incumbents and builds durable competitive advantages.
• Third, performance within capital intensive sectors varies greatly depending on balance sheet strength and pricing power, which Goldman says favors active management over passive exposure to the theme.

The bank identifies five core sectors of focus: infrastructure, basic materials, aerospace and defense, manufacturing, and technology's physical layer, and frames the opportunity as moving from a broad re-rating toward a more selective, earnings-driven, stock picker's market.

The HALO label itself has a shorter and less Goldman-centric history than the framework's prominence might imply. The term was introduced by Josh Brown, CEO of Ritholtz Wealth Management, in a Substack post published February 8, 2026. Sixteen days later, Goldman strategists Guillaume Jaisson and Peter Oppenheimer published "The HALO Effect: Heavy Assets, Low Obsolescence in the AI Era," which turned the idea into a formal research framework and a long-short pair trade, holding capital intensive names long against capital light ones. Goldman has since expanded on the thesis, including a July note describing the trade moving into a new phase, and has broadened the lens to emerging markets. Other desks and financial outlets have since adopted "HALO" as general market shorthand, a trajectory similar to how "Magnificent Seven" started as one analyst's phrase before becoming common industry usage.

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There you go, I always thought it was Beyonce who coined the phrase ;-) 

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Terms explained

HALO

Short for Heavy Assets, Low Obsolescence. It refers to companies whose physical capital, such as grids, pipelines or industrial plants, is expensive to replicate and stays economically relevant across technology cycles, instead of being made obsolete by the next innovation wave.

Capital intensive versus capital light

Capital intensive companies need large, ongoing spending on physical infrastructure to operate, such as utilities or industrial manufacturers. Capital light companies, like many software firms, depend more on intangible assets and need comparatively little physical investment to scale.

Pair trade

An investment position that goes long one asset or basket and short another related one, aiming to profit from the difference in performance between them rather than from the direction of the broader market. Goldman's HALO pair trade holds capital intensive names long against capital light names short.

Basis points

A unit equal to one hundredth of a percentage point, often used to describe small changes in interest rates, yields or, as in this note, contributions to GDP growth. Fifty to sixty basis points equals 0.5 to 0.6 percentage points.

Fiscal impulse

The estimated effect of government spending or tax changes on economic growth over a given period. Goldman's estimate of a 50 to 60 basis point boost to German GDP reflects planned spending on defense, energy transition and infrastructure.