‍

Our investment committee met recently with James Thompson, lead manager of the Rathbones Global Opportunities Fund since 2003, the top performing fund in the Investment Association Global sector in that time, as well as outperforming the MSCI World Index. Another of our chosen conviction managers he currently holds 57 companies aligned to his “Quality Growth” philosophy.

‍

2025 proved more difficult with performance impacted by an underweight position in the "Mag 7" technology stocks. However, this positioning reflects a deliberate approach. Diversification is not about following consensus, but about identifying future winners before they are widely recognised. Welcome to "HALO", the next most talked about trend after AI?

‍

Hard Assets Low Obsolescence. This is a strategy in investing in companies that own physical, hard assets, which are hard for AI to disrupt. Examples are the fast-food giant McDonald’s, delivery firm FedEX, Coca-Cola and equipment makers such as John Deere and Caterpillar which James Thompson has recently bought into.

‍

Whilst AI is a digital innovation, its expansion relies heavily on physical systems. Data centres rely heavily on energy, so we need a growing power supply. Copper and precious metals underpin electrification and hardware and these have to be extracted. There is a demand for greater infrastructure not just for data centres, but for cooling or storage. Logistics are essential for global supply chains to enable production and delivery, and the world economy continues to need increasing amounts of copper and precious metals which need heavy duty machinery to extract. This dynamic mirrors the Industrial Revolution where progress depended on coal, steel and transport networks in order to scale.

‍

HALO is therefore a complimentary approach to AI and the tech sector. Technological revolutions are rarely driven by innovation alone – they rely on the businesses that build, power and sustain them. James Thompson expects that around 10% of his fund will be directed to such companies.

‍

Comments from James Scott-Hopkins, Founder of EXE Capital Management. The views are those of the author only.

The above does not constitute a recommendation to buy specific funds or assets and advice should be sought from your financial advisor as to the appropriateness of this in your portfolio. The value of investments can fall as well as rise. Past performance is no guarantee of future returns.

‍