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| Quarter | Letter Date | Fund Name | QTD | YTD | Tickers | Themes | Quick Take |
|---|---|---|---|---|---|---|---|
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"City Different's Multi-Cap Core strategy lagged the S&P 500 in Q3 due to momentum-driven rallies in speculative growth stocks they avoid. Mid-caps were the primary detractor."
City Different Investments' Multi-Cap Core strategy underperformed the S&P 500 during the third quarter, returning 6.34% versus 8.12% for the benchmark. The 1.8% shortfall was primarily driven by stock selection among Emerging businesses and mid-cap holdings, which suffered from a narrow, momentum-driven rally in speculative growth names that the strategy largely avoids. Mid-caps were the primary detractor, trailing benchmark peers by almost nine percentage points. Despite quarterly underperformance, the strategy remains slightly ahead year-to-date at 15.0% versus 14.8% for the S&P 500. The manager sold Digital Ocean due to disappointing business fundamentals and redeployed proceeds into higher conviction ideas. Portfolio manager Rob MacDonald describes his investment process as popping tags - searching for new ideas like thrift shopping, then conducting deep research to find the few beautiful investments that make it through the rigorous analysis. The strategy maintains its differentiated, balanced approach across the business life cycle, with the manager viewing current disappointing performance as potentially an ideal time for new capital deployment.
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Algorithmic conviction, macroeconomic posture, and risk appetite signals extracted from this quarterly letter with qualitative explanations.
Market Conviction
Horizon manages diversified model portfolios rather than concentrated stock holdings, resulting in low-to-moderate conviction scores. Tactical rotations are executed across broad sectors and regions rather than specific high-conviction security selections.
Growth Outlook
The manager remains constructive on the medium term, expecting opportunities to emerge once near-term volatility clears, despite acknowledging present equity drawdowns.
Risk Appetite
Models remained fully invested across equity and fixed income allocations, though risk appetite was dynamically tempered by tactical shifts into defensive sectors and regions.
Capital Deployment
The portfolios remained fully invested, representing net neutral capital deployment, with adjustments restricted to reallocation between existing exposures rather than changes in cash levels.
Forward Guidance
Horizon is maintaining a balanced monitoring posture, awaiting earnings guidance, trade policy developments, and labor market trends before making further major adjustments.
Language Signal
The overall tone is constructive and balanced, framing current market drawdowns as common occurrences and focusing on long-term goals-based navigation.
Perceived Risk
The manager notes meaningful macro risks, including rising volatility, client sentiment exhaustion, trade tariff uncertainty, and corporate credit spread widening.
Opportunity Density
The manager sees ample medium-term opportunities emerging from the current market correction, notably in international developed equities and structured credit.
Time Horizon
Portfolios are managed with a multi-year, goals-based financial planning horizon, prioritizing long-term disciplined asset allocation over short-term market timing.
