October 2018 saw the newly formed first European ETP white labeller, HANetf, Hector and Nik ETF, named for co-founders and co-CEOs, Hector McNeil and Nik Bienkowski, launch their first product, EMQQ Emerging Markets Internet and Ecommerce UCITS ETF.
The idea for a white labelling business had come in 2017. The pair had exited WisdomTree, which had bought their Boost ETF business, and were about to exit their final 5 per cent holding in ETF Securities. “We thought ‘what’s next?” says McNeil, “and we were thinking about various different options such as cryptocurrencies and commodities and we felt that white labelling was such a big thing in the US, but didn’t exist in Europe, we should open it up in Europe. There are nearly 20 white labelling solutions and firms in the US and Europe, being more complex, was the next growth area where people would need that expertise.”
The firm now has 40 products from 20 firms on its platform and has hit USD2.5 billion in assets under management. “Nothing comes out as you think it will,” McNeil says, ‘but we have done a lot of great things and we believe changed the market by massively reducing the barriers to entry.”
Asked if he feels the firm could have done some things better, McNeil says of course, but qualifies immediately: “We have done some things really well but even when you succeed it always takes twice as long and costs twice what you think it’s going to do, however, potentially, of the four businesses we have set up in the ETF space, HANetf is the one that makes me most proud as it will have the biggest impact on growing the European market.” This, he says, is even in the context of ETF Securities where they were part of the team who invented Gold ETFs globally and grew a business from zero to USD27 billion AUM when they left.
“It’s yet another first for Nik and I and it is great to have created some really successful products such as the Royal Mint highly successful sustainable physical gold product RMAU and partnering with ETC Group to issue Germany’s first physical bitcoin ETC – BTCE – these are market global firsts, along with the first carbon credit physical product and EMQQ.”
EMQQ was a European version of Kevin Carter’s US ETF that offers investment in internet-related emerging markets, and McNeil says that the firm’s latest win has been to work with Societe Generale to recently issue the European Green Deal UCITS ETF – EUGD. This is HANetf’s first globally recognised client, he says.
“I am most proud of massively reducing barriers of entry to ETF issuance, bringing the price down to 10s of thousands of dollars rather than millions and reducing the time from years to months to enable asset managers to enter the European market. We offer a coherent, cost and time efficient way for small to medium sized asset managers to enter the ETF market,” he says.
The rate of growth for HANetf, through 2021 when their crypto offering was booming, saw them ranked as the ninth fastest growing private company in the UK according to Beauhurst Research, but thematics and growth equity ‘fell off a cliff’ and digital assets hit the wall.
“Luckily we had the responsibly sourced physical Gold (Royal Mint),” McNeil says, commenting that the firm lost over USD1 billion in price and but added half a billion of net new money. “But our margins got crushed on our higher margin products, as the price pressure affected growth (thematic) equities and digital assets (crypto) – we are proud but disappointed but it’s just the vagaries of the market. What is satisfying though is gathering more than USD500 million of net new assets shows that our distribution services work equally well in down markets. As the product offering grows at HANetf we will be even more diversified so that will help in all market environments.”
Products wise McNeil wants to work with fixed income providers. HANetf only has one fixed income product that was issued for a Mexican brokerage firm Finamex Mexico S&P/BMV International UMS Sovereign Bond 5-10yr UCITS ETF – MEXS. The firm is keen to work with fixed income specialist asset managers to add those products to the platform and partner on adding value added ETFs, McNeil says.
In an earlier life, McNeil was a semi-professional rugby player and he believes that his professional sporting background definitely helped in building businesses.
“I went to a state school and worked from 12 years up and learnt the value of money, especially being a Yorkshire man of Scottish descent,” he says.
“I knew I could get what I wanted if I worked and that’s a good grounding and preparation to become an entrepreneur.”
He also likes working as a team. “The competitiveness, teamwork and aggression of sport coupled with me being a Yorkshire man is a unique mix that has given me an edge,” McNeil says.
“It’s a great thing but did hold me back earlier in my career as I expect the same high standards of people I work with and a pace which not everyone can offer and I have learnt to temper that over the years. Everyone is different so my expectations need to reflect that and, since Covid, people’s outlooks and motivations have changed. Empathy is key to a lot of ways to motivate people today. It’s a hard skill to learn if it’s not natural to you.”
Over his career, McNeil, with his close partner Nik Bienkowski, has launched some 650 ETPs, and estimates that number represents 8 per cent of every ETP on the planet – the mere fact that he has calculated this demonstrates his attention to detail and desire to win.
Watch out in the US, as HANetf has plans for expansion. McNeil recently went on a roadshow with the London Stock Exchange to North America, talking about the complexities and advantages of coming to Europe. He explains that they had over 100 attendees at the roadshow which for context is around the number of issuers in Europe today which he says shows massive demand and intentions for new entrants to the European market.
“There are big opportunities ahead for us,” McNeil says, citing active ETFs and defined outcome products as largely untapped opportunities in Europe.
