Family Investors Pivot to Old-Economy Assets to Mitigate AI Disruption Risks

Family offices are increasingly shifting their investment strategies toward old-economy businesses, such as car dealerships and fisheries, to avoid the volatility and disruption associated with artificial intelligence. This trend, mirrored by the 'HALO' (Heavy Assets, Low Obsolescence) trade on Wall Street, prioritizes stability, reliable cash flow, and long-term viability over the high-growth potential of tech startups. Mark Sotir, president of Equity Group Investments (EGI), explains that these asset-heavy industries offer predictability for multi-generational wealth preservation, as their relevance is less likely to diminish over decades compared to software sectors. Additionally, recent tax reforms, including renewed bonus depreciation under the 'one big beautiful bill' law, have enhanced the attractiveness of these investments by providing significant tax advantages. These benefits allow families to offset income from other active investments, improving after-tax returns. Unlike traditional private equity firms focused on short-term exits, family offices leverage their long-duration capital to acquire these assets at discounts, benefiting from geographic moats and regulatory barriers that limit competition. This strategic pivot highlights a broader preference for tangible, resilient assets amidst economic uncertainty and rapid technological change.