Principal Protection
Principal Protection is a risk management strategy with an objective
to return, at a minimum, an investor’s initial principal, minus any fees
and withdrawals, at the end of a 7-year period. Horizon Investments,
LLC offers this risk management strategy* as an overlay to individual
investors who are participating in the Lifetime Income Strategy and
Horizon’s Enhanced Portfolios.
Horizon Investments uses principal protection as a risk management
strategy which analyzes the portfolio holdings inside your account, and
provides a quantitative reason to reallocate a portion of the portfolio
to a fixed income basket in order to protect your principal.
* not a guarantee against loss or decline in the value of your portfolio.
How does Principal Protection work?
- Principal Protection tracks the value of your portfolio as well as
the value of a theoretical fixed income basket related to your specific
holdings.
- Principal Protection uses its proprietary volatility modeling
algorithms to forecast future volatility of your portfolio. It
simultaneously calculates a series of trigger levels that will generate
signals to reallocate assets based on the value of your portfolio.
- These trigger levels may vary depending on the value of your
portfolio relative to its initial protected value, the time remaining on
the term of the Principal Protection,the level of forecasted volatility
within your portfolio, and the general level of interest rates, among
other factors.
- You may liquidate your portfolio from Principal Protection at any time at the then-current market value of the portfolio.
- Principal Protection value will also be less any withdrawals and fees.
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Why does Principal Protection work?
- The Principal Protection model was jointly developed by a team of industry and academic professionals.
- The combination of theoretical modeling and real-world trading
experience was crucial when constructing the Principal Protection
model. The scarceness of experienced Equity and Fixed Income volatility
traders combined with the uniqueness of the theoretical/real-world
approach helps explain why the strategy employed by Principal Protection
has not been widely applied.
- The Principal Protection model has been thoroughly and successfully
back-tested through the worst financial markets of the last 25 years,
including the 1987 Crash, the1998 Long Term Capital Management/Russian
Default crisis, the Internet bubble meltdown of 2000, September 11, 2001
and the severity of 2008.
Disclosure
Principal Protection is NOT A GUARANTEE against loss or
declines in the value of your portfolio. It is a principal protection
strategy that accompanies, in this case, Horizon’s traditional
strategies. Horizon's products are subject to risk including, general
market risk,currency fluctuations, and economic conditions. The
Portfolios' underlying investments fluctuate in price and maybe sold at a
price lower than the purchase price resulting in a loss of principal.
There may be economic times where all investments are unfavorable and
depreciate in value.
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