Horizon has implemented portfolio strategies with Exchange Traded Funds (ETFS) since 2009. ETFs, which combine characteristics of both mutual funds and individual securities, have become one of the fastest-growing investment segments of the financial services industry.
ETFs generally offer:
- Low cost. Because most ETFs are designed to mirror the performance of a particular market index, their management and operations costs can be much lower than traditional mutual funds. Lower costs means more of investors’ capital can be put to work.
- Tax efficiency. ETFs offer greater tax efficiency compared to mutual funds through low portfolio turnover, the ability to establish cost basis at the time of investing, and the elimination of imbedded capital gains.
- Intraday trading. Unlike mutual funds, ETF shares trade on exchanges and can be bought and sold at market prices at any time during the trading day. This gives ETF investors flexibility in changing market conditions, creating the potential for advanced trading strategies.
- Transparency. Investors in index-based ETFs know exactly what their ETFs own. This is because ETFs own the same investments that make up the underlying indices that they track (or a representative sample of those investments). What’s more, many ETFs disclose their holdings every day, while mutual funds generally make those disclosures less frequently.
- Investment options. Today, there are ETFs that cover nearly every index, sector, geographic region and asset class of the financial markets. That means investors can quickly and easily build efficient, well-diversified portfolios using the appropriate combination of ETFs based on their goals and investment preferences.
