Steve Hawkins has hired the co-founder of the firm he purchased last month and renamed, LongPoint Asset Management Inc., as his chief operating officer.
“We’re going to do some creative, interesting things, and I think many Canadians will appreciate what we come to market with,” said Myron Genyk, chief operating officer of LongPoint.
Genyk started Toronto-based Evermore Capital Inc. in June 2021. The firm launched Canada’s first target-date retirement ETFs in February 2022, but terminated them a year later due to an unfavourable economy, poor overall market performance and distribution challenges.
Following that, Evermore changed its business model and launched the country’s first white-label platform for ETFs. White labelling allows an entity to launch a product under another firm’s registration as a portfolio manager and investment fund manager to reduce the entity’s upfront costs.
Hawkins purchased Evermore at the end of April and renamed it LongPoint Asset Management. Hawkins is the CEO.
“I’ve known Steve for a long time,” Genyk said. “He has a vision, and I knew he would do a good job running things. We [as Evermore] were looking at different sale opportunities, and because of my history with Steve and what I know he can do, it made the most sense to sell to him.”
White labelling will continue under LongPoint, and the firm also plans to launch its own ETFs.
Hawkins said that, during his tenure in the industry, he’s spoken with many people who had great ideas for ETFs but lacked the wherewithal to bring them to market on their own. With LongPoint, “I hope to democratize the ability to launch, operate and grow ETFs,” he said. “We are going to be a full-service platform to partner with to bring an ETF to market.”
Hawkins was CEO of Horizons ETFs Management (Canada) Inc. from 2006 to 2022. Horizons was renamed Global X Investments Canada Inc. on May 1 of this year.
LongPoint’s own ETFs will be passive products, while “everything that might be considered active will be a partnership,” Hawkins said. “We want to allow active managers to bring products to Canada that they haven’t been able to before.”
LongPoint plans to work with both domestic and international firms.
“There are still a lot of areas of the ETF industry in Canada that haven’t yet been fully developed,” Genyk said. “There are a lot of interesting ideas in other countries that we might want to bring to Canada.”
Hawkins said he particularly hopes to bring strategies from U.S. firms to the Canadian marketplace. “There’s so many more advantages with Canadians buying Canadian ETFs,” he said, referring to the tax-reporting requirements for U.S.-domiciled property.
LongPoint’s services will not include sales, though the firm will refer partners to sales experts if required.
“A lot of the people I’m initially partnering with already have an audience; they’re thought leaders and have a presence in the marketplace,” Hawkins said. “We [provide] all of the infrastructure, operations and ongoing management of the product other than sales.”
With nearly 1,400 ETFs listed in Canada, LongPoint wants to work with firms that have unique ideas.
“We’re probably not going to partner with somebody who just wants to launch an S&P 500 ETF. I don’t think that’s a viable strategy in this marketplace unless [the partner] already has an institutional client,” Hawkins said. “I’m not going to try and launch another bitcoin ETF or another marijuana ETF.”
Rosie Rubie, head of Canadian ETFs with Cboe Global Markets in Toronto, said differentiation is critical in today’s competitive landscape.
“White labelling is a niche business, and with niche businesses come niche products,” she said. “They tend to be innovative because there’s nothing out there like them. As the [ETF] industry grows and thrives, this service model is only going to contribute to that.”
A 2023 report from American consulting firm Oliver Wyman concluded that in the U.S., white labelling can work well for products that anticipate generating below-average assets under management.
“New fund launches generally have a high risk of failure — making the white-label route the preferred option for smaller players to minimize direct impact on the provider,” the report said. “Furthermore, the white-label route offers faster speed-to-market of three to six months, which is particularly critical for ETF providers with innovative portfolio strategies.”
White labelling is a common practice south of the border, with Bloomberg reporting that more than 100 ETFs were released using that method as of late 2022. U.S. white labellers include Exchange Traded Concepts; Tidal; and ETF Architect, an arm of Alpha Architect.