Artificial intelligence (AI) is reshaping how many companies and industries work, and while that creates opportunities for businesses, it also creates risks; some businesses may become obsolete if AI reaches the potential many analysts believe it might.
In light of these risks, there's a new exchange-traded fund (ETF) that's been born recently, centering around the HALO acronym, which means "heavy assets, low obsolescence." The idea is to focus on businesses that might be immune to AI disruption and that may continue to do well even as AI advances.
The RoundHill HALO ETF (CBOE: LOHA) just launched and it has 100 holdings. There's a broad mix of stocks from different sectors within the ETF, including Phillip Morris International, AutoZone, and Canadian National Railway. The focus is on companies with real physical assets and businesses which AI can't easily disrupt to make obsolete anytime soon. No stock accounts for even 2% of the portfolio, making it a fairly diversified option for investors.
More than one-third of the holdings are in the industrials sector, followed by materials and consumer staples, which each account for 16% of the total portfolio. The vast majority (78%) of the holdings are large-cap stocks with valuations of more than $10 billion, while mid-cap stocks account for the remaining 22%. The portfolio is focused entirely on the U.S. market.
The fund's expense ratio is 0.35% and it's passively managed. It's an intriguing option for investors who are worried about AI disruptions and uncertainty due to tech, but whether the strategy will yield strong results, however, remains to be seen.
