Episode summary
Horizon Enters, Fidelity Enhances
ETF Prime
· · Hosts: Nate Geraci, Simeon Hyman · Guests: Clark Allen, Mike Hagopian
Summary
Horizon’s head of product said the firm entered ETFs in January to fill specific gaps it saw in the market and to support its model portfolio business. Horizon now has nine ETFs and about $1.2 billion in assets, with products built around a goals-based framework spanning accumulation, preservation, and distribution. The firm’s approach blends systematic stock selection, options-based risk management, and custom model construction for advisers, with SFTY highlighted as a preservation strategy for clients nearing retirement and NOT framed as a one-ticket way to capture AI, crypto, quantum, energy, and nuclear themes.
Fidelity’s institutional portfolio manager described the firm’s Enhanced ETF lineup as a middle ground between passive index funds and traditional fundamental active management. The eight ETFs use quantitative stock selection, proprietary risk models, and daily portfolio oversight to seek modest outperformance while staying close to benchmarks like the S&P 500 or MSCI EAFE. He argued that the process is more flexible than smart beta because it can incorporate non-traditional data such as options activity, earnings-call text, and patent-related signals.
On flows and positioning, he said international exposure is getting more attention because of US market concentration, valuation concerns, and better diversification abroad. He also argued that the current environment can favor systematic active strategies, but the real goal is durability across regimes rather than timing any single factor.
Key takeaways
- Horizon said it launched ETFs to solve model-portfolio gaps, not just to seed plain-vanilla products into adviser portfolios.
- SFTY is designed for the preservation phase, using a risk-assist algorithm to shift toward short-term Treasuries during drawdowns.
- NOT is Horizon’s one-fund answer to emerging themes, bundling AI, crypto, quantum, energy, and nuclear exposure.
- Fidelity’s Enhanced ETFs aim to stay close to benchmark exposure while pursuing modest excess return through proprietary models and daily oversight.
- The Fidelity manager said international stocks are drawing interest because the S&P 500 is increasingly concentrated and developed ex-US offers broader sector and name diversification.
- He said the enhanced process can use non-traditional data like earnings transcripts, options activity, and patent signals to improve security selection.
Notable quotes
“These aren't just riskbased models. It's it's centered around accumulation, preservation, and distribution because we believe investors their risks and um potential things objectives that they need to achieve change as as they age”
“it's not about what a product's called, it's about what it does”
“the enhanced ETFs really help create that solution between passive and the more traditional active space”
How the episode opens
But what you're seeing is there's there's growing concern regarding the the concentration risk, right? So a small proportion of stocks held in that index are influencing that return, right? All right.
Joining me will be Clark Allen, head of product at Horizon, who back in January, they entered the ETF space by launching their first two ETFs. The Horizon Landmark ETF and the Horizon Expedition Plus ETF. And if you fast forward to today, they're now at nine ETFs already about 1.2 billion in assets.
So, they've ramped up very quickly. And a big part of that initial growth has been the use of these ETFs in model portfolios that Horizon offers to financial adviserss. And what I think is unique about that is Horizon isn't just launching some plain vanilla ETFs so they can plug them into their models.
Instead, they're actually finding some shortcomings in the ETFs available on the market. Uh, in other words, what they're looking for doesn't really exist. And so, they're deciding to build it themselves to use in their model portfolios.
And so, I'm looking forward to this conversation because I'm going to have Clark offer some uh clear examples of this, have them explain how their ETFs are addressing shortcomings in the marketplace, and then we'll also discuss their model portfolio construction process uh overall and find out some of the specific concerns Clark is hearing from adviserss right now. So he'll join me here in a moment and then later I'll be joined by Mike Higgopian, institutional portfolio manager at Fidelity, who is going to take us through the Fidelity enhanced ETF lineup. Uh so this is currently eight ETFs altogether, now 25 billion in assets.
This includes some uh very strong inflows this year. And I would describe these as systematic ETFs but with an active management overlay.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- etf product development
- etf launch
- model portfolio strategy
- enhanced etfs
- active management vs passive
Companies and tickers mentioned
- Horizon
- Fidelity
Watch the episode
Watch “Horizon Enters, Fidelity Enhances” on YouTube
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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ETF Prime, this episode and its artwork belong to Nate Geraci. Octagon is not affiliated with the show; this page is an independent summary.
