Goldman’s Europe note argues that roughly 40% of the MSCI Europe index sits in sectors it considers heavy asset and low obsolescence, including energy, materials, regulated utilities, capital goods and select semiconductor names, which gives the region a structural tilt toward the theme. The note also points to Germany’s fiscal impulse as a potential 50 to 60 basis point addition to GDP through defense, energy transition and infrastructure spending, a meaningful figure against German GDP growth of just 0.2% in 2025. Goldman frames the opportunity as increasingly a stock picker’s market rather than a broad sector re-rating, given how much balance sheet strength and pricing power vary across capital intensive names. The bank has also extended the same lens to emerging markets, suggesting HALO is becoming a cross-regional framework rather than a Europe-only call.
—
A term coined outside Goldman in February has become the bank’s own framework for betting on tangible, hard-to-replicate assets, and its latest note argues Europe is where that bet works best.
Summary:
- Goldman Sachs Research applied its “HALO” framework, short for Heavy Assets, Low Obsolescence, to European equities, arguing the region’s sector mix and policy backdrop make it a strong fit for the theme.
- Goldman estimates energy, materials, regulated utilities, capital goods and select semiconductor names make up around 40% of MSCI Europe.
- The note points to Germany’s fiscal impulse potentially adding 50 to 60 basis points to GDP through defense, energy transition and infrastructure spending, against 2025 German GDP growth of just 0.2%.
- Goldman’s thesis rests on three pillars: a “security premium” attached to energy, water and commodity access, the scarcity and slow replication of physical assets underpinning AI build-out, and wide performance dispersion that favors active stock selection over passive exposure.
- Goldman identifies five core sectors for the theme: infrastructure, basic materials, aerospace and defense, manufacturing, and technology’s physical layer.
- The HALO term did not originate at Goldman. Ritholtz Wealth Management CEO Josh Brown coined it in a Substack post on February 8, 2026, and Goldman strategists Guillaume Jaisson and Peter Oppenheimer published their own framework around it 16 days later, on February 24.
Goldman Sachs Research has applied its “HALO” investment framework to European equities, arguing that the continent’s sector composition and policy environment make it a natural fit for a theme built around heavy, hard-to-replicate physical assets. In a note titled “Securing the Tangible Future: The Active HALO Playbook,” the bank’s strategists argue that years of asset-light dominance in global markets are giving way to renewed interest in the tangible economy, driven by geopolitical fragmentation, the physical build-out of artificial intelligence infrastructure and the energy transition.
HALO stands for Heavy Assets, Low Obsolescence, describing companies that own expensive, difficult-to-replicate physical capital whose economic relevance persists across technology cycles, think power grids, pipelines, utilities and long-cycle industrial capacity. Goldman’s note argues Europe stands out within the global theme for two reasons: its market skews toward “old economy” sectors, with energy, materials, regulated utilities, capital goods and select semiconductor names making up around 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 meaningful boost given German GDP grew just 0.2% in 2025.
The bank frames three structural shifts behind its conviction.
- First, access to energy, water and commodities has moved from a routine procurement concern to a national security priority, benefiting companies that own the grids, pipelines and fabrication plants involved.
- Second, the physical assets underpinning AI infrastructure are inherently scarce and slow to build, which the bank argues protects incumbents and creates durable competitive advantages.
- Third, performance within capital intensive sectors varies widely 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 shifting 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 suggest. The term was coined 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 formalized the idea into a research framework and a long-short pair trade, holding capital intensive names against capital light ones. Goldman has continued to build on the thesis since, including a July note describing the trade entering a new phase, and has extended the lens to emerging markets. Other desks and financial outlets have since adopted “HALO” as general market shorthand, a pattern similar to how “Magnificent Seven” began as one analyst’s phrase before becoming common usage across the industry.
—
There you go, I always thought it was Beyonce who coined the phrase 😉
—
Terms explained
HALO
Short for Heavy Assets, Low Obsolescence. It describes companies whose physical capital, such as grids, pipelines or industrial plants, is expensive to replicate and stays economically relevant across technology cycles, rather than being made obsolete by the next innovation wave.
Capital intensive versus capital light
Capital intensive companies require large, ongoing spending on physical infrastructure to operate, such as utilities or industrial manufacturers. Capital light companies, such as many software firms, rely more on intangible assets and require 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, commonly used to describe small changes in interest rates, yields or, as in this note, contributions to GDP growth. Fifty to sixte 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.
This article was written by Eamonn Sheridan at investinglive.com.