New mutual fund player aims for quick rise to $10bn in AUM

$10 billion is the magic number for mutual fund firms, says active fund veteran

LoGiQ Asset Management, the product of a merger between Aston Hill Financial and Front Street Capital, has named active mutual fund veteran Joe Canavan as its CEO. The firm manages about $3 billion in assets primarily owned by retail investors, but the Financial Post reports that Canavan is aiming for more.

The newly named chief executive – whose experience includes stints with Fidelity Investments, GT Global, Synergy Asset Management and Assante Wealth Management – is working on the thesis that conditions “will get tougher and tougher” for firms with less than $10 billion in assets. “If $10 billion is scale for asset management, it’s imperative for us to move towards scale as quickly as possible,” he said.

That conviction is driving Canavan to pursue an aggressive acquisition and cost-reduction strategy. He aims to seek out firms that share his vision and passion, acquiring them largely through share offerings to let them “participate in the upside.” He has also renegotiated with the firm’s service providers to get lower cost agreements.

“[Aston Hill and Front Street] had to get their costs under control so that they could keep their pricing competitive with the bigger players,” said Canavan, explaining the discussions that led to the merger between the firms and his eventual appointment as the chief executive. “As a smaller player, you have to be very focused, very specialized and have a very talented wholesaling team that can take an investment grade message to the market place.”

Aiming to make LoGiQ “unique, different and agile,” Canavan plans to cull staff, retaining only the best managers from both firms. He also is looking to reduce the funds being offered, either via mergers or terminations, and introduce a new group of funds, some of which will be for qualified investors. The funds will be classified into specialized equity, specialized yield, and alternative categories.

According to the Post, Canavan is unfazed by the rise of ETFs. He has said that they are “great as a low-cost core index replicating structure… What we do is the explore [part of a client’s portfolio.]” A bigger concern for him is hiring the right leadership team.

Gordon McMillan, the company’s largest shareholder, has thrown his support behind Canavan. “Joe is an extremely accomplished and well respected industry leader and he is the ideal person to drive LOGiQ into the future,” he said.

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