Horizon Kinetics Texas ETF (TEXX)

The Horizon Kinetics Texas ETF represents a different approach to state-level equity investing. Rather than passively tracking all Texas-based companies, TEXX applies an active, value-oriented investment lens to the Texas opportunity set. Horizon Kinetics, an asset manager with decades of equity research experience, uses their disciplined research process to construct a portfolio of Texas companies they believe offer compelling value. This means TEXX is smaller and more concentrated than a passive Texas index would be, holding only the positions where Horizon Kinetics has the highest conviction.

The fund emerges from a specific philosophy: that careful research into the underlying assets and capital structures of companies can identify securities trading below their intrinsic worth. Applied to Texas, this methodology leads Horizon Kinetics to examine not just the largest, most obvious Texas firms but also smaller, underappreciated companies or overlooked segments of well-known industries. A Texas-based energy company might trade at a discount due to temporary commodity-price weakness; a financial services firm might be mispriced because of temporary earnings volatility; a diversified industrial conglomerate might benefit from repositioning that the market hasn’t fully priced in. TEXX’s portfolio reflects Horizon Kinetics’ bets on these kinds of dislocations.

Because TEXX is actively managed, it does not simply hold all Texas-domiciled companies. The fund’s holdings rotate as the managers’ research uncovers new opportunities or as previously undervalued positions reach fair value. This gives TEXX the flexibility to concentrate capital where conviction is highest, but it also means the portfolio is smaller than a passive fund and necessarily excludes many Texas firms. Some investors view active management as a path to outperformance; others view it as a source of unnecessary fees and tracking error. TEXX’s track record — whether the managers’ research has actually identified undervalued opportunities — is what determines which view proves correct.

The fund is still structured as a simple, non-leveraged exchange-traded fund, traded throughout the day on a major exchange. Its expense ratio is higher than a passive Texas equity fund because it incorporates active management fees. The fund’s prospectus and fact sheet will disclose the portfolio holdings, sector allocation, and the fund’s investment process. An investor should read these materials carefully to understand exactly which Texas companies Horizon Kinetics is backing and why.

An investor considering TEXX should recognize that they are making two bets simultaneously: a geographic bet on Texas and a manager selection bet on Horizon Kinetics’ ability to identify undervalued Texas companies. If you believe Texas is an attractive market but doubt that active stock picking adds value, a passive Texas fund would be more suitable. If you believe in Horizon Kinetics’ research process and Texas’s economic prospects, TEXX aligns both convictions into a single position. The fund is most appropriate for investors with a multi-year investment horizon who are willing to hold a concentrated, actively managed portfolio and who have done their homework on the fund’s investment philosophy and the managers’ track record.