Yesterday's SPi Canada event in Montreal was a significant milestone for us. Five years after our inaugural event in the city, we welcomed 267 delegates, making it our largest Montreal event to date. The room was at full capacity, with some attendees even having to sit at the back due to the lack of available chairs.
More importantly, the day reinforced the importance of education, transparency and practical application in the continued development of the Canadian structured products market.
Risk, transparency and adjusted returns
Eric Barthe delivered an extensive presentation on adjusted returns and decrement indices. While highlighting that the Canadian market currently presents lower levels of certain risks compared with some European markets, he also spent considerable time illustrating potential worst-case scenarios.
The message was clear and important: higher coupons generally come with higher risk.
I particularly appreciated the balanced discussion around single-stock products, which carry meaningful additional risk, while also highlighting potential opportunities in less fashionable or more defensive sectors. Perhaps, sometimes, boring is good.
The next generation of portfolio management
We also discussed the role of structured products in the next generation of portfolio construction. One of the key themes was the value of payoff diversification.
The objective should not simply be to select individual products, but to build portfolios that are appropriate for each client and aligned with their individual objectives, risk tolerance and investment goals.
Adviser experience and client conversations
Our adviser panel brought together professionals at different stages of their careers and provided valuable insight into how structured products are being used in practice.
A recurring theme was the importance of having positive and transparent conversations with clients — particularly around explaining risks and mark-to-market movements.
Ultimately, when a product performs as expected and a coupon is paid, there is perhaps no better opportunity to have a positive conversation with an investor about the role the product has played in their portfolio.
Practical application
The practical case studies reinforced another important theme: diversification should extend beyond simply holding different products.
Advisers should consider diversification across payoffs, underlying assets and maturity dates, avoiding excessive concentration in any single factor or market exposure.
The Canadian market
SPi data presented during the event shows that the Canadian structured notes market now has just under $100 billion of AUM. This is a remarkable milestone and reflects the significant development of the market over recent years.
The growth has been supported not only by strong product performance — with the products tracked by SPi delivering close to 10% annualised returns — but also by the increasing number of advisers incorporating structured products into client portfolios.
Looking ahead
The final discussion focused on the future of structured products in Canada, with the outlook remaining very positive.
Higher interest rates, volatility and continued adviser adoption are creating a supportive environment for the asset class. Principal Protected Notes, particularly participation products, appear to be an important area of focus, while extending structured product solutions into interest-rate exposures represents a natural area for further innovation.
Overall, yesterday demonstrated both how far the Canadian market has come and the opportunities that remain ahead.
A big thank you to everyone who contributed to the event, our speakers and panellists, our data and research teams, and of course the 267 delegates who joined us in Montreal.
