A Modernized Method of Portfolio Design

Traditional portfolio diversification strategies divide portfolio holdings amongst the major asset classes such as U.S. stocks, foreign stocks, emerging markets, bonds, real estate, gold, commodities, and cash. We believe in a more modernized approach to portfolio design by further diversifying portfolios via multiple investing methodologies, portfolio strategies, investing time frames, and managers/research providers - all within a single portfolio.

We believe the reason for diversifying beyond the traditional norms is simple. During negative market cycles such as the tech bubble bear market of 2000-02, the Great Financial Crisis of 2008, and the COVID Crash of 2020, investors saw that traditional diversification strategies did not provide the degree of protection against losses that had been hoped for. We contend this is due to increasing correlations among asset classes that tends to occur when the U.S. stock market experiences a severely negative cycle.

We believe that during times of crisis there are two asset classes that drive portfolio performance: government bonds, which tend to rise and then, basically, everything else. We have found that most asset classes outside of government bonds, such as foreign and emerging market stocks, commodities, real estate, high yield bonds, REITs, etc., tend to become more highly correlated to the U.S. stock market during negative market cycles. As such, the majority of traditional portfolio suffers alongside the S&P 500.

We strive to generate true diversification by introducing modern risk mitigation strategies as well as multiple investing methodologies, strategies, and managers to the portfolio.

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We describe the Horter investment management platform by using the terms “Low Risk” and “Low Volatility” to emphasize the strategies employed by our money managers. However, notwithstanding the risk management strategies employed by these money managers, certain investment portfolios employed by our money managers present a greater degree of investment risk than others depending upon the performance of the underlying securities. We typically refer to these strategies as “Moderate Risk” and “Moderate Volatility”. Such performance can be impacted by a number of risk factors, including but not limited to (i) the level of price volatility (equity securities generally have greater price volatility than debt securities, (ii) changes in interest rates, and (iii) the ability of the manager to purchase or sell a security in a timely manner at desired prices.

Investment advisory services offered through Horter Investment Management, LLC, a SEC-Registered Investment Advisor. Horter Investment Management does not provide legal or tax advice. Investment Advisor Representatives of Horter Investment Management may only conduct business with residents of the states and jurisdictions in which they are properly registered or exempt from registration requirements. Insurance and annuity products are sold separately through Horter Financial Strategies, LLC. Securities transactions for Horter Investment Management clients are placed through AXOS Advisor Services, Schwab and Nationwide Advisory Solutions.