A Hard Road

Three years of less-than-stellar financial market performance.

It’s been a tough slog for investors over roughly the past three years, with most corners of the market
offering little to nothing in the way of gains. Over that period, of course, interest rates have soared,
corporate earnings have been stagnant overall, and valuations have fallen.

Consider that, since December 31, 2020:

  • Bonds are down a whopping -16.5%.
  • A balanced global portfolio of 60% stocks/40% bonds is down -5.4%.
  • Global stocks are up a mere 6.1%—and, as seen in the chart, it’s been a rough ride to get there.
MSCI Global Stocks

Source: Bloomberg, as of 10/31/23

Financial market gains have been exceedingly tough to come by over the past few years, regardless of
how you’ve invested among traditional asset classes. The brutal downturn seen in 2022—the worst year
for stocks since 2008 and the worst year on record for bonds—has meant that many asset classes are still
trying to claw their way out of a historically deep hole. In particular, relatively conservative or “balanced”
investors have taken it on the chin, as bonds’ significant underperformance has actually exacerbated
equity market declines rather than offset them.

Of course, market weakness over short periods, such as two or three years, is common. What’s more, the
robust economic growth numbers we’ve seen lately (e.g., nearly 5% GDP growth in the third quarter and
strong consumer spending) could set the stage for a substantial upswing in the coming months as more
investors appreciate the economy’s continued resilience.

This commentary is written by Horizon Investments’ asset management team.

Past performance is not indicative of future results.

Nothing contained herein should be construed as an offer to sell or the solicitation of an offer to buy any
security. This report does not attempt to examine all the facts and circumstances that may be relevant to any
company, industry, or security mentioned herein. We are not soliciting any action based on this document. It is
for the general information of clients of Horizon Investments, LLC (“Horizon”). This document does not
constitute a personal recommendation or take into account the particular investment objectives, financial
situations, or needs of individual clients. Before acting on any analysis, advice, or recommendation in this
document, clients should consider whether the security in question is suitable for their particular circumstances
and, if necessary, seek professional advice. Investors may realize losses on any investments.

The Bloomberg Aggregate Bond Index is a broad base, market capitalization-weighted bond market index
representing intermediate-term investment grade bonds traded in the United States. The MSCI World Index
captures large and mid-cap representation across 23 Developed Markets (DM) countries. Bloomberg US EQ:FI
60:40 Index is designed to measure cross-asset market performance in the US. The index rebalances monthly
to 60% equities and 40% fixed income. Reference to an index does not imply that any account will achieve
returns, volatility, or other results similar to that index. An index’s composition may not reflect how a portfolio is
constructed in relation to expected or achieved returns, portfolio guidelines, restrictions, sectors, correlations,
concentrations, volatility or tracking error targets, all of which are subject to change. Individuals cannot invest
directly in any index. Indices are unmanaged and do not have fees or expense charges, which would lower

The investments recommended by Horizon Investments are not guaranteed. There can be economic times
when all investments are unfavorable and depreciate in value. Clients may lose money. Asset allocation
cannot eliminate the risk of fluctuating prices and uncertain returns. All investing involves risk of loss, and in
periods of market growth, risk mitigation strategies can be expected to lag in performance behind equity
strategies that do not focus on risk mitigation.

This commentary is based on public information that we consider reliable, but we do not represent that it is
accurate or complete, and it should not be relied on as such. Opinions expressed herein are our opinions as of
the date of this document. These opinions may not be reflected in all of our strategies. We do not intend to and
will not endeavor to update the information discussed in this document. No part of this document may be (i)
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consent. Forward-looking statements cannot be guaranteed.

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