Horizons ETF Management has entered into an agreement to acquire Recon Capital Advisors LLC in a move that illustrates the growing appeal of the U.S. ETF market.
According to the terms of the agreement, the members of Recon Capital along with their four ETFs will join Horizons ETFs, a member of Toronto-based Horizons Exchange Traded Funds Group. The financial terms of the deal were not disclosed.
The addition of these ETFs to the Horizons platform means that Horizons ETFs will offer five U.S.-listed ETFs, representing approximately $149 million in assets under management, as of Sept. 30.
This family of ETFs includes the $63 million Horizons S&P 500
Covered Call ETF (HSPX).
This deal gives Horizons
another toehold in the U.S. ETF market.
With approximately $11.8 billion in assets under management and 197 ETF listings worldwide, the Horizons ETFs Group claims one of the largest collective families of ETFs in the world, but the U.S. footprint remains small.
All of the Horizons ETFs Group companies and affiliates are subsidiaries of Mirae Asset Global
Investments Co., Ltd.
The Recon Capital ETFs coming into the fold include:
The $13 million Dax Germany (DAX), the $52 million NASDAQ 100 Covered Call (QYLD), the $14.4 million USA Managed Risk (USMR), and the $3 million BullMark LatinAm Select Leaders (BMLA).
Todd Rosenbluth, director of mutual fund and ETF research at CFRA, described the deal as a logical move for any firm trying to compete among the
handful of giants in the ETF space.
“The five largest ETF providers has garnered significant share of ETF flows in 2016, in part because of the low cost nature of their products and their brand awareness,” he said. “As such, smaller providers are at a disadvantage. This deal provides some scale benefits that could help to compete more effectively in 2017.”
Garrett Paolella, Recon Capital chief executive, and Kevin Kelly, the firm's chief investment officer, will join Horizons ETFs as managing directors, with Troy Cates retaining the role as head of trading and executive director.
"Horizons ETFs has built a solid reputation as an innovator in the global ETF market, and we share this commitment to innovation," said Mr. Paolella in a statement.
“The U.S. ETF business is highly competitive, but few ETF providers have the global breadth of product and expertise that Horizons ETFs has, and we think we can leverage that global expertise to dramatically grow our domestic business and build on our successes,” he added.
The team from Recon Capital will join Horizons effective immediately. The transition of the ETFs to Horizons is expected to be finalized by Q1 2017.
