A Generational Shift in Structured Investing: How BMO’s SEYF Is Reshaping the Modern Portfolio

by Pierre Daillie, Managing Editor, AdvisorAnalyst

The investment landscape is undergoing a profound transformation. Traditional portfolios—once anchored in the enduring 60/40 construct—are increasingly under pressure. Correlations between equities and bonds have converged, volatility remains stubbornly elevated, and the search for income in a rising rate environment continues to challenge even seasoned allocators.

Against this backdrop, BMO Global Asset Management’s CEO, Bill Bamber, is spearheading a new generation of outcome-oriented strategies that redefine accessibility to structured investment payoffs. His solution? SEYF—the Strategic Equity Yield Fund, a first-of-its-kind actively managed mutual fund in Canada designed to replicate the core advantages of structured notes within a professionally managed, always-on vehicle.

“It is a moment of reflection on how to construct what I call the new modern portfolio,” Bamber says.

In this conversation—part of the Insight is Capital¹ podcast—we dive deep into the why, how, and what’s next for structured note strategies now available to all investors.

From Complexity to Clarity: Why Structured Notes?

Structured notes are not new. Bamber, whose 30-year career in capital markets spans Toronto, New York, and even Johannesburg in the post-apartheid era, has been at the forefront of their development. These instruments gained broad traction after the Global Financial Crisis for a simple reason: clarity.

“A focus on transparency with regard to formulaic payout was very appealing… if X happens, I get Y,” Bamber explains.

As interest rates fell and yield became elusive, AutoCallable structured notes—with features like downside buffers and enhanced income—took center stage. “The Auto Call really became very, very popular,” he says. “There’s usually enough yield generated from [it] that you can, at the same time, provide a modicum of buffering to the downside”.

But growing demand has created complexity. With over 14,000 new structured notes issued annually in Canada, advisors are inundated with choice.

SEYF: A Mutual Fund Engineered for the Structured Note Era

Recognizing a void in the market, Bamber and his team developed SEYF to offer a mutual fund solution with all the structural benefits of a customized note—without the overhead.

“We created the Strategic Equity Yield Fund to help the advisor make that extension to the end client… providing really a one-ticket solution that’s professionally managed,” Bamber says.

Launched in June 2023, SEYF is designed to solve several pain points:

• Daily liquidity with NAV-based pricing.
• AutoCallable exposure managed across multiple counterparties.
• Risk-buffered strategies between 70–80% drawdown protection.
• Professional price discovery, with BMO selecting the best coupon from competing counterparties.

According to Bamber, SEYF typically executes new allocations twice per week. “What we have typically seen is roughly anywhere from a 10 to 20% variation between the best offer and the lowest offer… you replicate that twice a week over the course of a year, and you're going to accrue a lot more value for the investor”.

Designed for Resilience, Built for Income

SEYF’s portfolio construction is based on North American equity references—including the TSX 60, S\&P 500, Canadian banks, pipelines, and utilities—with up to 20% international exposure via benchmarks like the EuroStoxx 50.

All strategies are structured using buffered notes. “Everything we've done in the fund is a buffer level between 70–80% of the initial level… because advisors and investors tell us stability of secondary price is very important to them,” Bamber explains.

The fund targets an 8% annualized yield, but actual performance may exceed that.

“We’re paying out the monthly coupon based on the 8%… at present, we're north of 11%,” he notes.

Risk Management and Low Volatility Profile

SEYF is engineered for low-to-medium volatility exposure. “Thirty-day realized volatility is just slightly north of 3%… the VIX was at 15 this morning,” Bamber observes. “If we are able to manage the fund at a realized volatility level less than half of the stock market, I think we're doing a good job”.

Risk mitigation is embedded at several levels:

• Buffer levels on every structured note.
• Diversification across equity references, with no single concentrated exposure.
• Best-execution mandate across multiple issuing desks to optimize pricing.
• Reinvestment discipline that minimizes transaction fatigue and reinvestment risk.

“Just like when a note investor has their note position called away… we're doing that same thing, but we’re doing it for you,” Bamber says.

Portfolio Fit and Strategic Use Cases

Where does SEYF fit in a portfolio? According to Bamber, “it’s probably somewhere between a 10 and 20% allocation to an overall portfolio,” depending on the client’s needs.

Common use cases include:

• Reallocating proceeds from matured or called notes.
• Simplifying portfolios with dozens of line items.
• Bridging between equity and fixed income sleeves with a single vehicle.
• Accessing institutional pricing for defined outcomes.

“The fund is right for [clients] who are very much active in the space and just want to simplify their portfolio… this is a great one-ticket solution,” he emphasizes.

A Milestone in a Modern Era

SEYF marks several firsts for BMO Global Asset Management: it is their first protocol strategic fund, their first actively managed structured note fund, and now exceeds $100 million in AUM. With its one-year anniversary approaching in June 2024, Bamber sees momentum accelerating.

“Our focus is intense,” he says. “This has a lot of attention on it because it is such an interesting example of a very natural allocation in structured product world… it is a major generational shift”.

And while Bamber kept details under wraps, he teased that more innovative structured solutions are in development: “We have some very interesting things coming up… I’m not allowed to talk about them, but I’d love to come back on your podcast and share when they’re live”.

Conclusion: The Next Chapter in Portfolio Construction

SEYF is more than a product—it’s a response to the new reality of investing. A tool for advisors seeking resilience, clarity, and defined outcomes amid macro uncertainty.

As Bamber puts it: “We've seen rates drop basically for an entire generation. And now we're in a very, very new allocation. It's time to reflect on how to construct the new modern portfolio”.

With SEYF, BMO Global Asset Management is helping advisors and investors take that step—confidently, clearly, and with institutional strength behind them.

Fund Snapshot: BMO Strategic Equity Yield Fund (SEYF)

• Launch Date: June 2023
• Target Yield: 8% (actual accrual currently >11%)
• Structure: Mutual fund (81-102 compliant)
• Exposure: North American equities (80%+), up to 20% international
• Protection: 70–80% downside buffer
• Liquidity: Daily subscription and redemption at NAV
• Risk Rating: Low to Medium
• Ideal Allocation: 10–20% of total portfolio

For more information, advisors can access BMO GAM’s investor dashboard, which includes biweekly updates on allocation decisions, market conditions, and NAV behavior.

Footnote:

1 “Bill Bamber, BMO GAM CEO: "A generational shift in accessing structured investment payoffs"." AdvisorAnalyst, 7 March, 2024.