When we introduced the HALO trade (Heavy Assets, Low Obsolescence) earlier this year, the core idea was that investors would increasingly favour businesses backed by scarce, hard-to-replicate physical assets as AI accelerated disruption across asset-light industries. Today, we believe that thesis has only strengthened.

Since April, markets have become even more concentrated around a narrow group of AI beneficiaries, while competitive disruption, valuation dispersion, and technological uncertainty have accelerated. As AI continues lowering barriers to entry for many digital business models, investors are placing a greater premium on durable assets with clear replacement value, predictable cash flows, and long-term strategic relevance.

Importantly, performance in 2026 has validated the HALO thesis. Through July, Global REITs have returned approximately 15.5% year-to-date, outperforming both the S&P 500 and global equities, which have each gained roughly 10%. July itself was another strong month for the asset class, extending REITs' leadership into the second half of the year despite a backdrop of geopolitical tensions in the Middle East, elevated interest rates, and periodic volatility across AI-related equities. The ability of REITs to continue delivering strong returns amid these headwinds reinforces our view that investors are increasingly favouring businesses backed by scarce, durable, and difficult-to-replicate real assets.

What has become increasingly clear is that AI is not replacing real assets. It is creating greater demand for them. Every new AI application ultimately requires power, cooling, connectivity, logistics networks, and physical capacity. The current phase of the AI cycle is increasingly defined by infrastructure constraints rather than software innovation alone. This dynamic places many real estate sectors at the centre of the investment opportunity, particularly data centers, communications infrastructure, and logistics properties that enable the digital economy.

At the same time, a growing pipeline of AI-related IPOs and private market valuations is directing even more capital toward a similar set of growth narratives. While innovation remains powerful, investors are increasingly being asked to underwrite long-duration growth assumptions in industries where competitive dynamics can shift rapidly. By contrast, many HALO assets derive their value from physical scarcity, replacement cost, and the essential role they play in supporting economic activity.

From a portfolio construction perspective, we believe investors are becoming increasingly exposed to concentration risk in a handful of AI-linked equities. Global REITs offer a differentiated way to participate in the same secular themes through the physical infrastructure required to support them. Data centers, cell towers, and logistics facilities are not competing with AI; they are helping enable its adoption and growth. Their cash flows are often supported by long-term contracts, tangible asset backing, and demand drivers that are becoming more important as AI infrastructure spending accelerates.

In our view, the most important development since launching the HALO framework is that the market is beginning to recognize the value of owning the real-world assets that underpin technological progress. Rather than being diluted by recent developments, the HALO thesis has been reinforced. The combination of heightened disruption, elevated valuations, increasing market concentration, and growing demand for physical infrastructure suggests that the role of hard assets, and by extension Global REITs, is becoming more relevant, not less.

For investors seeking diversification, durable cash flows, and participation in the infrastructure buildout supporting the AI economy, the HALO trade remains one of the most compelling themes in today's market.