And moving on to the big story breakdown with concentration at historic highs and interest rate expectations constantly shifting and geopolitical tensions creating sudden market shocks.
The case for a simple passive indexing is facing its toughest test in years.
Institutional allocators are increasingly turning to active risk overlays, derivative income strategies, and systematic hedges to protect capital without getting left behind.
And here this morning live at the New York Stock Exchange.
To break it all down as Clark Allen, head of product strategy at Horizon.
Clark, great to have you here.
Good morning and thank you so much for joining me.
Absolutely happy to be here.
Well first and foremost, let's talk about the big picture for investors out there.
Tell us what's happening when it comes to the macro picture as well as the rate outlook and why it matters for funds.
Absolutely there's a lot of volatility in the marketplace and as we've seen investors in some some cases have pivoted away from some passive strategies and looked for active strategies that have.
A lot more opportunity for alpha in many different facets.
The rate picture obviously there's a bit of uncertainty with inflation that that has, you know, in some cases gone up, but in other parts of the market, let's say jobs on Friday, it sort of brought rates back down to earth a little bit.
If you look at and just kind of zoom out and you think about earnings, the earnings picture and where things are, and you also look at sort of the broader market performance for the broad indexes, investors are quite happy, right?
Markets brought indexes up over 15% this year.
And they're just looking for that to continue because they want to continue to stay retired and support the growth of their market, the growth of their portfolio over time.
Yes, so despite all this volatility so far in 2026, we have been seeing record gains for the major US stock averages.
So when investors are looking for yield as well as looking for systemic de-risking, what does the picture look like now?
Yes, we talked to a lot of investors, a lot of advisors, and we say over and over, don't chase for yield, right?
Be very patient.
There are markets, parts of the market where you can go in and get. yield, uh, but there's always a cost for that yield.
And so if you want to support the growth of your portfolio, you want to support your retirement, if you will, uh, you, you need to be patient and you need to be thoughtful about the way you access that yield.
It's the same with the risk management strategies.
There's always a cost.
It's not free, right?
Getting protection in your portfolio is, is not, uh, there's no free lunch, right?
It's, it's kind of like a balloon when you squeeze one side, you're giving up maybe some upside.
And so be thoughtful about the solutions you're using.
And make sure that you've got a clear expectation on how they're going to perform in call it volatile markets.
Yes, and the fixed income market is something that we continue to keep our eyes on whether we're talking about the short or the long end.
So when it comes to active strategies, when we're talking about the Treasury market, what's going on?
Yeah, for, for us, uh, we've recently closed an acquisition of a fixed income manager and, and what we've said and we continue to say to all our investors and advisors is focus on active parts of the market, right?
The passive part of the fixed income market is definitely seeing a lot of pressure and so for you to just passively access that, call it aggregate bonds.
It's probably not a good solution.
And so look for active managers, look for opportunity, uh, maybe not trying to time duration, right?
There's been a lot of moves in the rate market.
So be, be patient with, with how you're seeking that duration.
Look to just sort of keep a benchmark, but look for opportunity through selection of individual bonds because that's where you're going to find alpha and opportunity.
Yeah, and speaking of which, I understand you used to run Quant Research at Horizon before your current role.
So what are some blind spots that you see when it comes to Quant?
Yeah, I think it's, it's, it's, it's setting it and forgetting it, right?
If you design a systematic strategy or quantitative strategy and then you don't continue to test that and stress test it against the market environment as things shift, as we've seen the market environment is very different today than it was 15 or 20 years ago, and if you just set and forget an algorithm.
A systematic strategy that in our view that's that's not the right thing to do.
So you need to continue to stress test and be willing to put aside your biases, and you know, be humble and be able to say I could be wrong and how do I make this strategy more robust across market environments and to meet the expectations of investors over time.
Yeah, which leads me to my next question regarding product strategies.
So tell us about what you're doing when it comes to active strategies at Horizon right now.
Yeah, for us, we started launching active ETFs at the beginning of last year.
We're now at 14 ETFs, just crossed over $4 billion and for us that speaks to how we sort of hit a vein in the marketplace.
We've done that by focusing on outcome oriented solutions that look to deliver expectational certainty.
They do what they say.
There's a lot of actor strategies out there that maybe are very.
There's a lot of potential alpha, uh, but we want to look at how do we deliver that with some certainty.
So we use options, we use derivatives, outcome oriented solutions, systematic strategies to make sure that we're we're doing what we're saying and that we're performing as expected in different market environments, right?
We're outperforming when we said we're going to and potentially underperforming when we say we're going to, and so that way an investor, an advisor knows how to use that in a financial plan, knows how to use that to meet the needs of their portfolio across time.
And finally, before I let you go, as you mentioned, there are a lot of active strategies out there for so for investors who are watching right now, what would you say is the competitive advantage when it comes to Horizon for us it's all around focusing on outcome oriented solutions, focusing on the holistic.
Portfolio.
We're not trying to sell a ticker.
We're never going to come into an investor meeting or meet with an advisor and just shove a fact sheet.
We're going to look to partner with them to meet their needs and figure out how the solutions we have may fit into their practice versus forcing their practice into our solutions.
Yes, and it's hard to believe, but here we are post jobs report, and we are well into the second half of 2026.
So what is your outlook as we head into the rest of this year?
Yes, we don't see any, anything that's going to cause any obviously big stress in the market.
Obviously that's Iran war could continue, right?
You could have continued stress in the market, but we, we, if you look at earnings more recently, right, fundamentals are super strong.
The broader economy is very strong, and so we see the market doing quite well into the end.
This year, obviously there's, there's always things that could happen, right?
You could could see this AI bubble pop at some point.
We don't think that's going to happen in the short term.
We see a lot of strength still there in the AI market and, and in general sort of the hyper scalers and also when you kind of think about the broader economy, let's say we get one wrong rate hike this year.
That's really not going to hurt the bigger picture because you have such strength in the economics and the fundamentals of the underlying companies.
Well, Clark, I appreciate your time.
Thank you so much for joining us live here at the New York Stock Exchange today.
Thank you so much.
Appreciate it.
