Each Action Report consists of the following two main sections.
Click to see a sample Action Report for one of our company supported plans.
No. If you are reallocating within a company plan or within investments held at a single mutual fund company, you will pay no fees for the transactions associated with reallocating your account.
In fact, the fee you are charged by your plan administrator and/or mutual fund company (this fee is transparent to you) includes the ability for you to make reallocations.
Some funds themselves charge penalties if you buy and sell them within specified holding periods.
Horizon will exclude most funds that include holding periods longer than 30-days. However, in cases where holding periods are unavoidable the Horizon Reallocation Process and corresponding Reallocation Worksheet provided step-by-step instructions for avoiding any fees.
You may use the Action Report's Model Portfolio in one of three ways.
Regardless of which approach you use, the very fact that you will be reviewing your account 10-11 times per year virtually assures that you will assume less risk by being properly aligned with the market.
The computer model follows a 5-step process.
The number of time slices, the weighting algorithms and the percentage amounts are the results of five years of extensive study by the Compass Institute.
They tested over 500,000 possible permutations of factors to come up with the correct combination that would provide the optimal results when applied to any combination of mutual funds.
It is important to remember that you are ALWAYS in control of your reallocation decision. Most subscribers follow the Model Portfolio exactly, as it has been proven to provide excellent results.
However, for whatever reason, you may occasionally want to do something different than what the Model Portfolio may suggest.
The Horizon model does not try to predict or call the tops or bottoms of markets. Rather, it adapts your portfolio to the ever-changing market tide as it unfolds.
Horizon is designed not to OVER react – that is, move out of or into a fund too soon – and you may feel that our analysis may be slow to react to what you (or others) believe may be a changing market.
While it would be ideal if the model would get you into and out of each fund at exactly the right time, this is not realistic. But once a market direction is confirmed, you can be assured that Horizon WILL properly position you for the next sustained moves, either up or down. Meanwhile everyone else will remain locked into increasing losses (in down markets) or reduced gains (in up markets) due to following a formulaic approach.
EXAMPLE: If you firmly believe that the market is going to go down and want to respond more aggressively to the Model's move into fixed income funds, then you may elect to move a larger percent of your money into those "safer" investments sooner. Sometimes you may be better off doing that, and other times you may not be. Nevertheless, that kind of guess work is what gets most people into trouble, as the markets do not always respond to logic.
Regardless of which way you choose, the very fact that you will be reviewing your account 10-11 times per year virtually assures that you will assume less risk by being properly aligned with the market.
Target Date Funds (TDF) are typically constructed by the mutual fund company using proprietary stock and bond funds to follow a traditional asset allocation approach, having a pre-determined and fixed percentage mixture of stock and bond funds. TDFs and most balanced account funds represent in and of themselves a set-it-and-forget-it strategy that our Adaptive Asset Allocation™ strategy both competes with and has been proven superior to.
Also, the Compass Institute back-tested fund collections both with and without TDFs and found that the long-term performance of Horizon was better for those portfolios that excluded TDFs.