HALO framework makes durability the private-markets test

Insurance AUM Journal argues insurers should sort private-market assets by durability first, asset-class labels second. Its HALO framework — Hard Assets, Low Obsolescence — contends that the standard split among infrastructure, real estate and private equity tells you less than the traits that let an asset hold up across regimes. The journal's starting point: the past decade rewarded growth and multiple expansion, especially in assets whose value lay far in the future. The next cycle, it says, may reward assets anchored in physical tangibility rather than financial tailwinds, against a backdrop of persistent inflation, elevated volatility and a higher cost of capital.

Two mechanisms carry the case. Inflation protection comes from regulated rate-setting or long-term contracts with explicit CPI links, such as utility rates tied to CPI or industrial leases that reset annually; rising construction and materials costs widen the gap between historical cost and current replacement value, so the asset passes inflation through rather than absorbing it. Downside resilience, per the journal, belongs to assets with contracted cash flows and essential demand: in major downturns they have shown materially lower downside capture than broader private equity. Specialized real assets in particular have kept generating income through periods of significant valuation compression. Physical assets provide collateral that supports financing access.

For a general account, the framework changes the question. The aim is not the highest yield spread but income that passes inflation through instead of absorbing it. Insurers with long-dated liabilities need cash flows that survive valuation compression, and the journal's bet is that physical scarcity delivers that where financial tailwinds did not. How durable the policy backing behind much of this demand proves is the open question.