Unexpected departure of long-serving ETF exec suggests pressure’s on in a very competitive space.
Adam Felesky is out as CEO of Horizons ETFs Management (Canada) Inc. after almost 10 years in the role. Mirae Asset, owners of Horizons ETFs had little to say about the sudden departure except to thank Felesky for his service to the company and all the best in his future endeavours.
These are not the words used to describe an amicable or expected separation. With the rest of the management team remaining in place led by interim CEO and executive chairman Taeyong Lee, it’s possible Felesky fell on his sword for Horizons’ mediocre performance in recent months at a time when Vanguard has been feverishly gathering assets.
A year ago Vanguard’s AUM were $1.3 billion less than Horizons’. At the end of 2014 that gap narrowed to less than $600 million. Another year like this past one and Vanguard will easily surpass Horizons’ moving into third spot – well behind BMO and then BlackRock, easily Canada’s largest ETF provider.
So what went wrong at Horizons?
Once upon a time it was the star child on the Canadian ETF scene, offering the first leveraged funds available in this country. I’m sure Felesky would see it differently but its leveraged and actively managed ETFs really don’t fit into a box suited to where the industry appears to be headed.
Yesterday, WP discussed passive investing specifically highlighting the special qualities of Dimensional Fund Advisors, both in terms of the mutual funds it offers, but also in the way it does business. In 2014 the 150 or so advisors it chooses to do business with (you have to go through a thorough interview process) each brought in an average of almost $5 million in new money. That’s not assets under management but a year-over-year percentage increase likely in the high single digits or low-to-mid double digits.
In other words DFA did well.
The advisor community is looking for KISS-type products. No, we’re not talking about Gene Simmons’ band but rather those products that are simple to understand and easy to use when constructing a client’s portfolio.
We’re not saying Horizons’ products are bad in any way. It’s just that many of their funds are more elaborate than advisors seem willing to embrace.
So, why was Horizons’ CEO let go?
While we might never learn the exact reason(s) Adam Felesky is no longer leading the charge, it’s clear Mirae Asset want someone new to reset the growth engine; someone without an attachment to its past.
These are not the words used to describe an amicable or expected separation. With the rest of the management team remaining in place led by interim CEO and executive chairman Taeyong Lee, it’s possible Felesky fell on his sword for Horizons’ mediocre performance in recent months at a time when Vanguard has been feverishly gathering assets.
A year ago Vanguard’s AUM were $1.3 billion less than Horizons’. At the end of 2014 that gap narrowed to less than $600 million. Another year like this past one and Vanguard will easily surpass Horizons’ moving into third spot – well behind BMO and then BlackRock, easily Canada’s largest ETF provider.
So what went wrong at Horizons?
Once upon a time it was the star child on the Canadian ETF scene, offering the first leveraged funds available in this country. I’m sure Felesky would see it differently but its leveraged and actively managed ETFs really don’t fit into a box suited to where the industry appears to be headed.
Yesterday, WP discussed passive investing specifically highlighting the special qualities of Dimensional Fund Advisors, both in terms of the mutual funds it offers, but also in the way it does business. In 2014 the 150 or so advisors it chooses to do business with (you have to go through a thorough interview process) each brought in an average of almost $5 million in new money. That’s not assets under management but a year-over-year percentage increase likely in the high single digits or low-to-mid double digits.
In other words DFA did well.
The advisor community is looking for KISS-type products. No, we’re not talking about Gene Simmons’ band but rather those products that are simple to understand and easy to use when constructing a client’s portfolio.
We’re not saying Horizons’ products are bad in any way. It’s just that many of their funds are more elaborate than advisors seem willing to embrace.
So, why was Horizons’ CEO let go?
While we might never learn the exact reason(s) Adam Felesky is no longer leading the charge, it’s clear Mirae Asset want someone new to reset the growth engine; someone without an attachment to its past.
