Steve Hawkins explains his return to Canadian ETFs

Steve Hawkins was living the dream. The former CEO of Horizons ETFs (now Global X Canada) spent sixteen months after his retirement travelling and reflecting. He attended all four tennis majors, watched a few F1 races, and set foot on every continent but Antarctica. Hawkins was content, with no intention of returning to work in the ETF space. That was until he had a conversation with Myron Genyk, the CEO of Evermore Capital who said he was ready to fold his company, leaving what was effectively an OSC-registered shell. In late April, Hawkins announced that he was acquiring Evermore and relaunching it as LongPoint Asset Management Inc.

Now the CEO of LongPoint, Hawkins explained exactly why he decided to jump back into the Canadian ETF space. He outlined the specific niche that LongPoint wants to specialize in and how he expects the new firm will differentiate themselves on a crowded product shelf. He gave some indications as to his growth ambitions for LoingPoint and shared what advisors can expect from his return to this industry.

“It was really the opportunity to buy a company, rebrand it, and do the things that I wanted to do,” Hawkins says when asked what made him decide to come out of retirement. “There were so many things that I wanted to do at Horizons and many relationships that I built there that I wanted to explore, which I wasn’t able to do under the Horizons ETFs banner. Now with my own shop, I can really start to explore those partnerships and relationships that I never had before.”

Rather than a traditional ETF shop with in-house managed funds, Hawkins is positioning LongPoint as more of a partnership platform for asset managers, registered individuals, and foreign companies that want to access the Canadian market. He added that Myron Genyk has been hired as Hawkins’ ‘number two’ at LongPoint.  

Hawkins says that it’s those sub-advisory projects that he loved working on at Horizons. However, he says that Horzions’ parent company Mirae Asset preferred to create their own proprietary products. Hawkins wants to build LongPoint with more of a focus on sub-advised mandates.

“I brought in several sub-advisors to Horizons while I was there, and some of those relationships are now leaving Horizons and need a place to go,” Hawkins says. “I actually prefer the world of the sub-advisor, Through LongPoint I can own product and sub-advise it out to registered entities and groups like that, or I can partner with them and they can own their own ETF which I can help them offer to the Canadian public.”

While Hawkins says LongPoint is set up for sub-advisory relationships with other Canadian asset managers, the majority of the interest he has received so far has been from US and international asset managers looking to penetrate the Canadian retail marketplace. Between regulatory hurdles and knowledge of the local market, Hawkins says that many of these foreign asset managers have struggled to adequately distribute product in Canada. Given Hawkins’ own relationships and experience in the Canadian market, he’s confident that LongPoint can serve to facilitate those entries into Canada.

Hawkins accepts that the product shelf for ETFs in Canada is crowded. We have about one third the total number of ETFs as the US market does, but only around six per cent of the total ETF assets. Hawkins explains that Canada’s disproportionately large number of ETFs doesn’t mean we have an equally sophisticated product set. Rather, as mutual fund companies transitioned strategies to ETF packages, we’ve seen a great deal of duplication on the market as those companies sought to retain their customers. For example, there are nine S&P 500 ETFs on the Canadian market and four S&P 500 ETFs listed in the United States according to S&P Global.

While Canada seems to be repeating strategies, Hawkins sees a host of US and international strategies that Canadian investors want. He highlights how frequently Canadian investors purchase US or international ETFs to access those strategies. While few international investors are buying into Canadian ETFs, Canadians are going abroad to find these strategies. Hawkins wants LongPoint to bring more of those strategies to the Canadian market, giving Canadian advisors and investors a simpler means of accessing them.

While LongPoint is still in its very early stages — the firm doesn’t yet have its website up — Hawkins is ambitious about its growth prospects. He doesn’t think anybody will be able to keep pace with iShares, Vanguard, and BMO in Canada due to their scale, brands, and distribution networks. He says that he’d like LongPoint to crack the top ten ETF issuers by AUM within the next two to three years. More important than that growth, he says, is building the kind of company he wants to come and work for every day with people he enjoys working with.

The first area of focus for Hawkins will be self-directed investors and institutional investors. Nevertheless he hopes retail advisors will be paying attention to what LongPoint rolls out.

“Stay tuned, because at some point you’re going to want a specific strategy that you can’t access,” Hawkins says. “Bring those ideas to me. I’m very happy to help you meet the needs of your clients and I can do that by creating very specific strategies for you and your clients. Those are the conversations that I’m having with former advisor clients of mine. Everybody’s excited to see what’s going to come next.”