The previous head of Horizons ETF Management (Canada) Inc. is re-entering the exchange traded funds industry with the launch of a new investment company, LongPoint Asset Management Inc.
On Friday, Steve Hawkins completed the purchase of Toronto-based Evermore Capital Inc., a registered investment fund manager that delisted its investment products from the Cboe Canada exchange in April, 2023. Mr. Hawkins has since renamed the company LongPoint.
Financial details of the transaction were not disclosed, and Mr. Hawkins and Evermore’s former chief executive and co-founder, Myron Genyk, declined to comment on whether Evermore staff or Mr. Genyk would be joining the new company.
Eighteen months ago, Mr. Hawkins unexpectedly announced his retirement as president and CEO of Horizons ETFs, effective immediately. Both Mr. Hawkins and Horizons spokesperson Jonathan McGuire declined to comment on circumstances of the sudden departure.
Now, Mr. Hawkins has re-emerged from retirement with LongPoint. The company is licensed to issue and manage mutual funds and ETFs, but will aim to partner with existing Canadian and U.S money managers that are looking to launch certain investment products but may not have the infrastructure to do so. For example, LongPoint can provide a mutual fund company that does not have regulatory ability to sell across the border with access to an ETF business while retaining their own brand.
National Bank Financial’s vice-president of ETFs and financial products, Linda Ma, said that despite the already large number of ETFs in Canada – over 1,350 funds – there is still room for opportunity in niche areas.
“We are still finding ourselves resorting to US-listed ETFs sometimes because there isn’t a Canada-listed alternative,” Ms. Ma said.
Mr. Hawkins said the “partnership model” was an idea that “numerous people” approached him about during his time at Horizons. He is currently in discussions with about half a dozen U.S and Canadian companies.
“This is a model that is used by several companies in the United States, but it isn’t really being offered by anyone in Canada,” Mr. Hawkins said. “It’s a niche part of the ETF industry that has not been tapped into.”
A similar partnership model in Canada was first launched in 2017 between The Bank of Nova Scotia’s Dynamic Funds and BlackRock Canada. At the time, Scotiabank had not yet launched its own proprietary ETFs. Rather, the bank’s well known mutual fund subsidiary, Dynamic Funds, launched a group of nine actively managed ETFs using BlackRock’s global ETF operating platform. (In 2021, the bank moved the nine ETFs into their own in-house business.)
Since then, Canada’s ETF landscape has become much bigger and more competitive. In 2023, the industry had about $38-billion in sales. Today there is more than $419-billion in assets under management being managed across 40 ETF companies, according to data provided by National Bank Financial. That is up from $147-billion in assets at 28 providers in 2017.
However, the entrance of a new start-up competitor doesn’t come without its challenges. Last year, four smaller ETF companies exited the industry, including Evermore Capital, which managed about $14.6-million in assets at its peak in February, 2023, according to data by National Bank Financial.
Editor’s note: Steve Hawkins delisted its investment products from the Cboe Canada exchange in April, 2023, not the Toronto Stock Exchange. This version has been updated.
Clare O’Hara