Understanding the Impact of Global Uncertainty on Investments
Over the past month, many investors have experienced a significant decline in their investment portfolios. The ongoing conflict in the Middle East has had a considerable impact on global equities, with the Australian market being no exception. The benchmark S&P/ASX 200 Index (ASX: XJO) has dropped approximately 2.6% since the beginning of March. This downturn has left many wondering what strategies they can employ to protect their investments during such turbulent times.
What is HALO Investing?
HALO investing stands for Heavy Assets, Low Obsolescence. According to a recent report from VanEck, this approach focuses on companies that have cash flows tied to essential real-world demand. These companies are supported by long-lived infrastructure, regulated frameworks, and long-term contracts. In the context of the Australian market, the HALO universe includes sectors such as mining, energy, infrastructure, utilities, transport, telecommunications, staples, and logistics.
The S&P/ASX 200’s exposure to these names is heavily concentrated in a small number of mega-cap miners. As a result, many investors may not be getting sufficient meaningful exposure to all the HALO companies through funds that track or are benchmarked to the S&P/ASX 200.
How to Benefit from HALO with This ASX ETF
A potential solution to this issue is the use of an equal-weighted approach, which could reduce concentration and provide more meaningful exposure to these HALO companies. One ASX ETF that offers this exposure is the VanEck Vectors Australian Equal Weight ETF (ASX: MVW). This ETF utilises an equal weight approach, providing a larger exposure to these HALO companies.
HALO companies share a common characteristic: their competitive advantages are rooted in physical assets that are difficult, expensive, or impossible to replicate. These include pipelines, toll roads, rail networks, power stations, mine sites, ports, fibre networks, and distribution centres. These assets are essential to the functioning of the economy and are supported by long-duration contracts or regulatory frameworks. They generate cash flows that are relatively insulated from technological disruption.
Over the last month, this strategy and focus have resulted in a nearly 3% rise for the MVW ASX ETF, outperforming the ASX 200.
The Strategic Approach
This ASX ETF uses a HALO-style approach by tilting its holdings toward companies with hard, essential assets and more stable, predictable cash flows. While the S&P/ASX 200 appears to have higher overall exposure to HALO names, much of that exposure is concentrated in large mining companies like BHP Group Ltd (ASX: BHP) and Rio Tinto Ltd (ASX: RIO). These companies have earnings heavily tied to volatile commodity prices rather than steady, contracted revenues.
Because MVW weights companies more evenly, it reduces the dominance of these cyclical miners. Simultaneously, it increases its allocation to a broader mix of infrastructure, utilities, energy networks, telecommunications, and consumer staples businesses. As a result, once the large miners are excluded, MVW actually has greater exposure to the types of companies that better reflect the HALO concept.
According to the report, this ASX ETF provides 1.4x overweight compared to the ASX 200 to the HALO names with contracted revenues, regulated cash flows, and essential demand characteristics.
Navigating the Current Macro Environment
The macro environment that supported MVW’s outperformance in March 2026 has not resolved. Oil prices remain elevated due to geopolitical risk, the RBA has signalled that rates will stay higher for longer, and household budgets are under pressure. In this environment, companies with contracted, inflation-linked revenues and essential demand characteristics are better positioned to protect margins than those exposed to discretionary spending, credit cycles, or technological disruption.
Final Thoughts
While the VanEck Vectors Australian Equal Weight ETF has shown strong performance, it is important for investors to consider their individual financial goals and risk tolerance before making any investment decisions. As always, seeking professional financial advice is recommended.
