Partnering with Traditional Asset Managers
Case Study 1:
Quickly Moving Beta / Tracking Error
Allows Macro PM to quickly move Beta / Tracking Error to capture cyclical opportunities
Scale, Customization and Transparency
Stage of Cycle
Recovery
Expansion
Slowdown
Contraction
Which Factors Have Tended to Perform?
Carry
Value
Value
Defensive
Defensive
Three Horizons
Manager Alpha
Macro PM has small set of alpha positions and a view of the business cycle.
Three Horizon builds the portfolio to make sure product risk guidelines are met including alpha picks while maintain the business cycle views
Ensuring the fundamental manager remains focused on their core competency and investment process.
Three Horizon utilizes proprietary technology to add customization, portfolio construction and execution for new accounts allowing for scale and customization.
Varying the allocation strategically can offer clients varying fees/Tracking Error “Customized Solutions”
This is how we did it
Client specifies duration and credit risk targets for 3 fixed income products
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They utilize duration and credit timing along with credit research on private securities.
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3HC utilize our portfolio construction to fill out the rest of the portfolio with tradeable FI securities
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1 Credit PM is able to manage 3 products and meet with clients 3 days out of the week.
Case Study 2: Building Cost Effective / Scalable Portfolios
Building a cost effective, customizable scalable fundamental platform
Fundamental team focus on the cycle and selection
Standard Offering
ESG Customized
Low Fee, Low TE
LDI
Three Horizon manages client customization due to constraints or account size (Sampling)
Three Horizon focuses on cost effective implementation by utilizing proprietary technology
Allowing a small team to manage many accounts –
Portfolio Creation Workflow
Manager Views
Manager Informs Three Horizons To Become More Defensive.
Portfolio Construction
Three Horizons builds trades needed to move all accounts to be aligned with Manager views.
Manager Sign Off
Manager Reviews Trades Before Execution.
Monitoring and Reporting
Reporting generated for the new portfolio.