In the last month, many investors have seen significant damage to their portfolios.
The ongoing conflict in the Middle East has weighed heavily on global equities.
Here in Australia, the benchmark S&P/ASX 200 Index (ASX: XJO) is down approximately 2.6% since the beginning of March.
You might be scratching your head, wondering what strategies can help weather the storm.
A new report from VanEck has shed light on the resilience of HALO investing this past month.
What is HALO investing?
HALO stands for Heavy Assets, Low Obsolescence.
According to VanEck, these are companies that have cash flows tied to essential real-world demand. This is supported by long-lived infrastructure, regulated frameworks, and long-term contracts.
Applied to the Australian market, the HALO universe spans 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.
Therefore, we think, the problem for many investors is that they are not getting enough meaningful exposure to all the HALO companies via funds that track or are benchmarked to the S&P/ASX 200.
How to benefit from HALO with this ASX ETF
According to the VanEck report, an equal-weighted approach could reduce concentration and provide more meaningful exposure to these HALO companies.
One ASX ETF that provides this meaningful exposure is the VanEck Vectors Australian Equal Weight ETF (ASX: MVW).
It utilises an equal weight approach, which provides 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. The assets are essential to the functioning of the economy, 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 has 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 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.
The macro environment that supported MVW's outperformance in March 2026 has not resolved. Oil prices remain elevated on geopolitical risk, the RBA has signalled 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, we think.
The post Why this HALO focussed ASX ETF outperformed over the last month appeared first on The Motley Fool Australia.
Motley Fool contributor Aaron Bell has positions in BHP Group. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended BHP Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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