Horizon Investments, LLC has been in business since 1995. It is a wholly owned subsidiary of Horizon Parent Holdings,
LLC, whose majority owner is ACP Horizon Holdings, L.P., an affiliate of Altamont Capital Partners. Horizon is an
investment adviser registered with the SEC under the Investment Advisers Act of 1940 (the “Advisers Act”).
Depending on the needs of clients, Horizon serves as a primary investment adviser (e.g., to Direct Client separate accounts
and mutual funds) or as a sub-adviser or wrap program manager or other type of third party asset manager to ETFs,
investment advisers, broker dealers and other financial institutions offering multiple investment advisory opportunities to
clients (each, a “Sponsor Firm”). Horizon also provides services for retirement plans. Horizon’s advisory services are more
fully explained below.
Other than certain mutual fund clients, Horizon client accounts are generally managed utilizing Horizon’s asset allocation
strategies. See “Item 8 – Methods of Analysis, Investment Strategies and Risk of Loss” for a description of strategies offered
by Horizon.
Clients who become Direct Clients are generally introduced by a broker dealer, RIA or other financial institution pursuant
to relevant provisions of Rule 206(4)-1 of the Advisers Act (each an “Introducing Firm”). Generally, the client’s
representative (typically, the client’s financial advisor) at the Introducing Firm instructs Horizon regarding the appropriate
investment strategy for the client, and the client’s representative at the Introducing Firm is responsible for monitoring the
ongoing suitability of the selected strategy and communicating any changes to Horizon.
Whether the client accounts are introduced to or receive services from Horizon through Sponsor Firms or Introducing Firms,
the client’s financial advisor (i.e. a representative of the Sponsor or Introducing Firm, as applicable) coordinates Horizon’s
services for the client. In each instance, we refer to such representatives herein as “Financial Advisors”.
INVESTMENT ADVICE GIVEN THROUGH FINANCIAL INTERMEDIARY FIRMS
Horizon as Investment Adviser to Wrap Fee and Similar Programs
In wrap fee programs, Sponsor Firms assist clients with the selection of Horizon (or have the discretion to select Horizon)
to manage the assets in accounts maintained at the Sponsor Firm, collect Horizon’s investment advisory fee on behalf of the
client, monitor and evaluate Horizon’s performance, and provide or coordinate custodial and execution services for the
client’s assets.
In wrap fee programs, clients generally pay an asset‐based fee to the Sponsor Firm (the “wrap fee”), and out of that fee, the
Sponsor Firm is responsible for paying a portion of the wrap fee as an investment advisory fee to Horizon. For a more
complete description of the fees involved with wrap programs, please see Item 5 of this Brochure and your Sponsor Firm’s
Brochure.
Horizon maintains model portfolios, based on certain established guidelines for wrap platforms, including Separately
Managed Accounts (“SMA”) and Unified Managed Accounts (“UMA”), as well as for Model Delivery Platforms (“MDP”)
(see below under the separate heading “Technology Platforms/Model Delivery Platforms”). These types of accounts are
described briefly below. For more information and to determine if any are appropriate for you, please consult your Financial
Advisor.
SMAs
A separately managed account is a term within the financial services industry used to describe an individually managed
account offered by a dually registered brokerage and investment advisory firm (often called a Sponsor Firm) through one
of their Financial Advisors and managed by an independent investment management firm (often called the money manager
or investment manager). Firms may call SMAs “wrap fee” or “dual contract” or “single contract” accounts, depending on
their fee structure.
These programs typically offer a wide array of money managers from which the client can choose (e.g., equity managers,
ETF strategists, fixed income managers). When a client selects a money manager through these programs, they will usually
grant the manager full discretion (including trading discretion) over the account. With this authority, the manager directs
trading activity in the account according to its investment process and securities selection discipline. (For more information
about Horizon’s trading policies please see Item 12 of this Brochure).
Each SMA requires its own custodial account. As a result, a client who chooses to invest with multiple managers maintains
multiple custodial accounts at the Sponsor Firm ‐‐ one for each asset manager selected.
UMAs
Unified managed accounts are similar to SMAs, but there are important differences that investors should note. A UMA
combines all of a client’s assets into a single account. As described above, an SMA holds the securities associated with a
single investment manager in a unique custodial account. Conversely, a UMA typically invests in multiple separate
strategies (i.e., “sleeves”) in the same custodial account, as well as other investment products such as mutual funds or
individual stocks and bonds.
In a UMA, the asset manager typically delivers an investment model to the UMA Sponsor (however, in some instances the
asset manager also has trading discretion over the UMA accounts; for information on Horizon’s trading policies and
procedures, please see Item 12 of this Brochure).
The differences in trade executions, as well as investment restrictions that these types of programs impose, can cause
accounts with the same investment manager and discipline to perform differently over the same time period.
Some Sponsor Firms have SMA wrap programs on which the investment manager (i.e., Horizon) does not have discretion,
trading or otherwise, over the accounts; the manager only provides a model to the Sponsor Firm. These programs are often
referred to as SMA Model Delivery Arrangements or Model Manager Sub-Advisory Arrangements. In other instances,
Horizon provides the model(s) to an MDP used by the wrap program (see below under the separate heading “Technology
Platforms / Model Delivery Platforms”).
Differences between SMA, UMA, and MDP Accounts
While Horizon’s
models used by SMAs, UMAs and MDPs are often similar, there are differences in implementation. There
can be performance dispersion between accounts where Horizon has trading discretion and where it does not (where it
therefore depends on a third party to execute instructions). This may cause the models to achieve different performance.
Additionally, UMA accounts may contain different investments based on parameters that govern the use of multiple
managers and other restrictions.
Clients should speak to their Financial Advisor about the similarities and differences associated with SMAs and UMAs, and
whether their accounts use an MDP, so they fully understand the account structure.
Technology Platforms / Model Delivery Platforms
The investment management industry continues to grow in its use of MDPs (also known as “Technology Platforms” or
“Strategist Platforms”) to efficiently deliver investment account models to multiple account holders. These MDPs are often
affiliated with trust companies or registered investment advisers. Under the typical MDP arrangement, an asset manager
like Horizon will enter into an agreement with the MDP whereby Horizon licenses its model accounts to the MDP. Potential
users of these model accounts then enter into subscriber agreements with the MDP to receive access to model accounts
(however, under some arrangements, the end client has an agreement with both the MDP and the model provider). The
MDP typically has technology that allows the model account to be applied to multiple accounts and for the model to be
delivered, implemented (i.e., traded), rebalanced and updated over time in individual accounts.
Horizon is a model provider to several MDPs. In some instances, these MDPs are selected by wrap sponsors as the required
method for wrap managers like Horizon to deliver model accounts. However, MDPs are not exclusively used by wrap
programs; MDPs are also available to third party broker-dealers and RIAs who access Horizon’s models for the benefit of
their clients.
There can be performance dispersion between accounts with the same model at different MDPs (because each MDP has its
own trading procedures, which may include, without limitation, proprietary account drift and rebalance protocol, and
timing, communication and clearing of market trades, each of which will differ from one another). These factors are not
controlled by Horizon and may cause the models to achieve different performance.
INVESTMENT ADVICE FOR DIRECT CLIENTS
Horizon as Investment Adviser to Direct Clients
Separate account clients who engage Horizon directly for investment advisory services (i.e., not through an MDP or other
third-party programs) are referred to herein as “Direct Clients.” For these clients, the Financial Advisor instructs Horizon
regarding the appropriate portfolio investment style (e.g., growth or conservative) based on pertinent and available
information such as: age, financial circumstances, investment objectives and risk tolerance. Once selected, the client’s
Financial Advisor is responsible for monitoring the ongoing suitability of the selected strategy and communicating any
changes to Horizon.
Investment Restrictions
The ability to impose restrictions on Horizon’s management is dependent upon the type of account; for example, because
Horizon does not manage individual accounts that participate in an MDP, there is no ability to impose restrictions, whereas
certain separate accounts managed by Horizon can be customized. In addition, Direct Clients can choose from among
several risk-based strategies, and for wrap programs, the Sponsor Firm chooses which of Horizon’s strategies are available
for investment in such programs. Contact us if you have questions about the ability to impose investment restrictions on
your account.
INVESTMENT ADVICE FOR POOLED INVESTMENT VEHICLES
Horizon as Investment Adviser to Mutual Funds and ETFs
Horizon acts as the investment adviser of all of the registered investment companies (i.e., mutual funds) that are part of
Horizon Funds, a Delaware statutory trust (collectively, the “Horizon Mutual Funds”). Horizon is also the sub-adviser for
exchange traded funds advised by First Trust Advisors L.P. (the “Horizon ETFs”). Horizon has discretion to direct
investments, select brokers and place transaction orders for the Horizon Mutual Funds; whereas Horizon has discretion only
to direct investments with respect to the Horizon ETFs (First Trust is responsible for trading).
Horizon Mutual Funds offer different share classes, which have different fee and expense structures, and not all share
classes are available on all custodial platforms or through a particular Sponsor Firm or Introducing Firm. Clients that invest
in Horizon Funds, whether through Hybrid Portfolios or otherwise, are encouraged to speak to their Financial Advisor or
Horizon about the differences between the share classes available.
ADDITIONAL INFORMATION
Other Services
Horizon provides non-discretionary investment recommendations, research or trading signals to accounts managed by other
registered investment advisers, and Horizon also provides sub-advisory services through a number of third-party investment
advisers, broker-dealers or other institutions (each, a “Third Party Advisor”). For Third Party Advisors, Horizon may
provide either Horizon-branded or private-labeled investment portfolios. Horizon also provides certain Third Party Advisors
with consulting and product development services.
Assets Under Management
As of December 31, 2023, Horizon managed $4,231,076,509 on a discretionary basis and $235,516,509 on a non-
discretionary basis. Total Regulatory Assets under Management (AUM) was $4,466,593,018.
As described above, Horizon also provides investment advice through third party model delivery programs. In instances
where Horizon has no discretion to coordinate trades and no supervisory responsibility over the assets in the program,
Horizon does not include these accounts in total AUM, but categorizes them as Assets under Advisement (AUA). As of
December 31, 2023, total AUA was $3,413,139,090. On a combined basis, AUM and AUA were $7,879,732,108. Contact
us for more information about these accounts.