LongPoint Asset Management Inc., led by Steve Hawkins, is poised to enter the Canadian ETF market with its first product. The company has filed a preliminary prospectus for the ForAll Core & More U.S. Equity Index ETF, which would track an index created by ForAll Investment Research Inc. of Powell River, B.C.1
The proposed ETF, with the ticker FORU, would be a dynamic asset-allocation fund that invests in other ETFs. It aims to trade on the Cboe Exchange and be hedged to the Canadian dollar. The ETF's structure includes a core component that consistently tracks the S&P 500 Fossil Fuel Reserves Free index, with the remaining allocation dynamically shifting between various ETFs based on market conditions1.
Reid Baker, president and CEO of ForAll Investment Research, explained that the index allocations would adjust according to market direction, with leverage and SPYX allocations potentially decreasing in falling markets and increasing in rising markets1.
The ETF's fee structure is innovative, with a maximum annualized management fee of 1.08% for months with positive total returns and zero for months with negative returns1.
Steve Hawkins, CEO of LongPoint, expressed enthusiasm about the potential launch, stating, "Hopefully the [prospective] launch of this ETF will add substance and credibility to LongPoint and its capabilities. We're very excited to be putting our first potential ETF into the retail marketplace, which will hopefully be the first of many."1
If approved, the ETF will be subadvised by U.S.-based Tidal Investments LLC. Hawkins explained the choice of partnership, saying, "I have a long history with founders of Tidal. As we're trying to build a broader brand here in Canada, working with one of the biggest partnership platforms in the U.S. made sense for us from a logistics perspective."1
This launch marks Hawkins' return to the ETF industry after his retirement from Horizons ETF Management (Canada) Inc. in November 2022. He acquired and rebranded Evermore Capital Inc. as LongPoint Asset Management Inc. in April 20242,5.
LongPoint's business model focuses on partnering with existing money managers who want to launch investment products but lack the necessary infrastructure. This approach could help mutual fund companies enter the ETF market more easily2,5.
Hawkins sees potential in bringing strategies from U.S. firms to the Canadian marketplace, noting, "There's so many more advantages with Canadians buying Canadian ETFs," referring to the tax-reporting requirements for U.S.-domiciled property4.
Despite the competitive nature of the Canadian ETF market, with over 1,350 funds and $419 billion in assets under management across 40 ETF companies, industry experts believe there's still room for growth in specialized areas2.
As LongPoint Asset Management Inc. embarks on this new venture, it will be interesting to see how it navigates the challenges and opportunities in the evolving Canadian ETF landscape.
Footnotes:
[1] https://www.investmentexecutive.com/news/products/longpoint-applies-to-launch-its-first-etf/
[2] https://www.theglobeandmail.com/business/article-former-horizons-ceo-re-emerges-in-etf-industry/
[3] https://www.wealthprofessional.ca/news/industry-news/steve-hawkins-explains-his-return-to-canadian-etfs/385857
[4] https://www.investmentexecutive.com/news/products/steve-hawkins-hires-evermore-founder-as-longpoint-coo/
[5] https://www.wealthprofessional.ca/investments/etfs/former-ceo-returns-to-etf-industry/385717
