INSIGHTS

Goals-Based Investment Management

WHAT IS GOALS-BASED INVESTING?

As a goals-based investment manager, we believe investment problems and challenges are best addressed in the context of an investor’s goals—the ultimate reason behind saving and investing. By aligning investment solutions with investor goals, investors have better opportunities to measure the actual “real world” outcomes they seek.

At Horizon Investments, we think most investors follow a journey that looks the diagram below—the investor grows wealth to a certain point in time and then spend that wealth. Along that journey, Horizon has identified three unique stages that investors encounter.

USING A GOALS-BASED APPROACH

Each client’s investment-related goals consist of three stages—accumulation (or the gain stage), preservation (or the protect stage) and distribution (or the spend stage). Importantly, for every goal, each stage has its own overarching objective and risk.

GAIN Stage
⊲⊲ Primary Objective: Accumulation
Growing wealth so it can support and enhance life goals.
⊲⊲ Key Risk Metric: Volatility
Intense volatility or declining markets can generate bad investor behavior.

PROTECT Stage
⊲⊲ Primary Objective: Preservation
Guarding wealth against catastrophic losses that can derail financial plans and directly threaten the ability to adequately fund goals.
⊲⊲ Key Risk Metric: Drawdown
The Protect stage begins reasonably close to the desired start of the Spend stage, which means there isn’t much time for investors to recover from large drawdowns.

SPEND Stage
⊲⊲ Primary Objective: Distribution
Ensuring that grown and preserved wealth is there to meet needs during what may be a lengthy and active retirement.
⊲⊲ Key Risk Metric: Longevity
The dominant investment risk in this stage is longevity: running out of money before the goal is fully met.

Ultimately, the fundamental definition of risk must change and adapt over time as an investor transitions into each new stage of the goals-based program. Likewise, the investment strategies and portfolio construction decisions aimed at mitigating risk must also change and adapt to each new stage. For example, a portfolio in the Gain stage should have different characteristics and attempt to mitigate different risks than a portfolio in the Protect or Spend stages.

To Learn more about Goals-Based Investing download our research paper here.

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Capitol Notes – WSJ CEO Council

Greg Valliere, Horizon’s Chief Global Strategist, was a panelist last night at the Wall Street Journal CEO Council. U.S. Senate Majority Leader, Mitch McConnell, told the

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Capitol Notes – Impact 2018 Interview

Watch as Greg Valliere, Horizon’s Chief Global Strategist, discusses politics and the impact they could have on the markets with Tom Lydon of ETF Trends

Why We Are Still Optimistic

Capitol Notes by Greg Valliere Horizon’s Chief Global Strategist YESTERDAY WAS UGLY IN MANY RESPECTS. Our sense is that the pipe bomb terrorism will stoke passions

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Horizon Investments’ Story

Horizon Investments is a modern, goals-based investment manager and think tank. Our focus is on goals-based investment strategies, to help financial advisors and their clients improve the investment experience relative to real world, prioritized financial goals.

Founded in 1995, Horizon provided investment advice to individual clients while utilizing a process based on quantitative analysis. Today our investment process balances quantitative expertise with a qualitative perspective, including economic, fundamental and geopolitical analysis. Over 20 years, we’ve continued to expand our investment management team to include the seasoned academics and research analysts needed to pursue forward-looking approaches to address a myriad of challenges that investors face while seeking to grow their wealth. As a result, financial advisors turn to Horizon for our innovative risk mitigation and retirement income strategies. Rooted in a global active investment approach, the firm’s GAIN PROTECT SPEND® framework, combined with its investment management methodology, has been a cornerstone of Horizon’s portfolio construction process for over a decade.

Click here to watch our history in review.

Team

Horizon is a leading provider of modern goals-based investment management. We work in partnership with financial advisors to deliver investment strategies that align clients’ wealth with their life goals.