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Connect the power of goals-based investing with custom solutions

The Horizon Difference

For over two decades, Horizon’s mission has been to empower advisors to help their clients reach their financial goals. We combine rigorous investment research with innovations in portfolio construction to offer practical strategies for all stages of a client’s investment journey.

Our grounding in goals-based principles allows us to focus on the desired outcome of a financial plan.

The Power of Customization

Horizon Custom Portfolios enable investors to own securities directly through a series of separately managed accounts (SMAs) while continuing to enjoy the benefits of professional active management.

In an SMA, investors directly own the stocks and bonds in their account, which allows for a level of customization unavailable with mutual funds and exchange-traded funds (ETFs). Investors can personalize their portfolio by selecting single security level restrictions, setting their target income distribution level, and choosing tax management tailored to their unique needs.

Distinctive Investment Approach

We bring active management to Horizon Custom Portfolios through a flexible approach combining qualitative and quantitative processes built on academic research and in-depth practical industry experience. Our process screens and scores equities along a broad range of financial characteristics to create a balanced representation of desired exposures. As part of Horizon’s active approach, these scoring methodologies undergo consistent reevaluation and monitoring to ensure our best and most up-to-date ideas are incorporated as market dynamics change over time.

Building a Horizon Custom Portfolio

Select from our starting equity strategies

Horizon’s custom portfolio selection process is built on the belief that a combination of quantitative and qualitative research, managed by an experienced team of investment professionals is a valuable approach to portfolio construction. The investment selection process starts by ranking large-cap, domestic stocks using a multi-factor framework that focuses on characteristics our team believes can provide long-term opportunities, including quality, momentum, growth, value, defensive core, and low volatility.

Each equity strategy selects stocks that represent a specific investment style. The resulting portfolios seek to deliver long-term outperformance through an active approach that employs continued fundamental and quantitative analysis.

Customize to meet investors’ preferences, goals, and unique income needs

Choose from portfolio customizations that are relevant to an investor’s financial goals:

Income Customizations

Horizon offers additional customizations to accommodate a range of risk tolerances and financial objectives. Investors needing income distributions may select a target distribution rate and how many years’ worth of cash reserves they need to meet their goals.

Fixed Income

Horizon Custom Portfolios allow investors to allocate up to 50% of an account’s weight to low-cost, targeted fixed-income exchange-traded funds (ETFs) and a cash reserve – allowing for a more flexible asset allocation for investors of varying risk tolerances and income needs.

In a fixed income allocation, Investors may benefit from diversification of the underlying ETF holdings that track core, investment-grade, and high-yield bonds. Each fixed-income solution offers broad exposure to underlying bond markets, with a municipal ETF selection designed for investors seeking a more tax-efficient offering implemented through nationally tax-exempt municipal bond ETFs.

Cash Reserve

Horizon Custom Portfolios also offer a strategic cash reserve. Investors with distribution needs may use this reserve to facilitate recurring and periodic withdrawals.

Equity Strategies

Horizon Custom Portfolios are built using our proprietary quantitative scoring and portfolio construction methodologies. We combine quantitative and qualitative assessments to define over 25 equity characteristics we use to evaluate performance and risk measures.

Our Core Equity strategy begins with a universe of U.S. large-cap stocks, which we rank using our multi-factor framework focused on quality, momentum, value, and low volatility. Our process selects a portfolio of individual stocks to create a portfolio suitable for long-term equity investing. Our Core Equity strategy is designed to be well diversified with only modest sector deviations when compared with large-cap indices.

Building on our Core Equity process, the Growth, Value, Low Volatility, and Dividend portfolios are structured to maximize exposure to target factors. Sector exposures in these portfolios will often differ from indices as our active multi-factor investment management process is applied.

Horizon’s investment management team conducts ongoing qualitative reviews of the portfolios in order to mitigate unwanted risks.

The Core equity strategy is constructed with holdings deemed high-quality U.S. companies with an emphasis on price momentum and attractive valuations.

Investor profile: The strategy may suit long-term investors seeking exposure to the stock market but also need risk mitigation through diversification. By investing in a broad range of stocks across multiple sectors and industries, investors may benefit from growth in the market while aiming to limit the impact of any individual company or sector downturn.

The growth equity strategy selects stocks that we believe have greater exposure to high-growth factors. Stocks in the portfolio often display increased rates of profitability and price momentum compared to other large-cap stocks.

Investor profile: The strategy may suit investors looking for companies with strong growth potential. These companies are often characterized by high revenue growth rates, a sustainable competitive advantage, and what we view as a solid business model.

The value equity strategy selects stocks that demonstrate a higher exposure to quality factors. Stocks in the portfolio tend to have lower valuations and less volatility than other large-cap stocks.

Investor profile: The strategy may suit investors looking for companies trading at a discount relative to their intrinsic value. The value equity strategy seeks to generate attractive returns over the long term by holding companies we have identified to be undervalued with strong fundamentals until we believe the market has recognized their true value.

Low Vol
The low-volatility strategy is focused on investing in companies that exhibit lower volatility than the broader market. These companies are often characterized by stable earnings, steady cash flows, and other fundamental metrics that suggest they are less risky than other companies in the same industry.

Investor profile: The strategy may suit investors looking for a more stable return profile while still seeking exposure to the stock market. Investing in companies with lower volatility aims to provide investors with consistent returns over the long term while minimizing the impact of market volatility and downturns.

The dividend strategy seeks to provide investors with a regular income stream from dividend payments while also benefiting from the long-term growth potential of the underlying stocks. Dividend-paying stocks may mitigate downside risk in volatile markets. Investors can still receive regular income even if the stock price declines.

Investor profile: The strategy may suit investors looking for regular income from their investments while also seeking exposure to the long-term growth potential of the stock market. By investing in companies with a history of paying dividends, these strategies aim to provide investors with a reliable income stream and the potential for long-term capital appreciation.

Ongoing tax management and active monitoring

Multifaceted tax management

Managing after-tax returns can be an important part of a financial plan for taxable accounts. By allowing investors to define their preferred capital gains budget and portfolio transition time frame, Horizon’s tax management will seek to limit the impact of both embedded and ongoing tax liabilities.

Horizon combines a stock-specific tax loss harvesting process with our Active Replacement Alpha selection methodology in an effort to reduce an investor’s tax burden, and portfolio drift from the target equity strategy.

Representative Elections and Trade-Offs

Tactical rebalancing

Each portfolio is monitored weekly for excess drift from the selected starting equity strategy. When necessary, portfolios are rebalanced based on investor goals, current tax credits or liabilities, and portfolio drift.

Horizon’s tax loss harvesting strategy evaluates each position based on its volatility characteristics and seeks to strategically capture losses when appropriate.

Active Replacement Alpha™

Active Replacement Alpha is a proprietary stock selection strategy that systematically replaces tax-harvested stocks with securities similar to the chosen style exposure and investment objective. The strategy seeks to:

Customized to help investors reach their investment goals

Horizon Custom Portfolios offer investors a distinctive investment solution customized to meet their personal preferences and tax management needs.

Please see important tax disclosure information below.

Want to learn more?

To learn more about Horizon Custom Portfolios, contact your Horizon representative.

No security is intended to be sold based on this document. The investments recommended by Horizon Investments are not guaranteed. There can be economic times where all investments are unfavorable and depreciate in value. Clients may lose money.

Asset allocation cannot eliminate the risk of fluctuating prices and uncertain returns. Strategies are subject to risks including general market risk and risks related to economic conditions. Underlying investments fluctuate in price and may be sold at a price lower than the purchase price resulting in a loss of principal. The underlying investments are neither FDIC insured nor guaranteed by the U.S. Government.

Horizon Investments reserves the right to modify its current investment strategies and techniques based on changing market dynamics or client needs. The investment strategy or strategies discussed may not be suitable for all investors. Investors must make their own decisions based on their specific investment objectives and financial circumstances. This material has been prepared for informational purposes only. Horizon Investments does not provide tax advice. Investors are strongly advised to consult with their tax advisers regarding any potential investment or specific tax questions and obligations. Certain transactions give rise to substantial risk and are not suitable for all investors.

Visuals and charts shown are for illustrative purposes only and should not be considered a guarantee of success or a certain level of performance.

Past performance not indicative of future results. This overview document is not exhaustive and is intended only to introduce certain strategies managed by Horizon Investments. Contact us for more information about these strategies and for a copy of our Form ADV.

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