Innovation in Finance Forum: a highlight of the season

By publishing the Future State of the Investment Industry last September, CFA Institute profiled our industry by outlining the significant developments that will affect it over the next 5 to 10 years. The Innovation in Finance Forum was an opportunity to mobilize our community around the 4 important pillars identified in this report: diverging worlds, sustainable finance, digital transformation, and the end of cheap money.

This event, presented by the AMF, took place on April 30 in front of a crowd of 200 people. It welcomed approximately fifteen experts, including Peter Letko, CFA, Candice Bangsund, CFA, Tom Rand, and Valérie Cecchini, CFA, to name just a few. These renowned speakers addressed the priority issues that will be decisive for the future of the profession, which is facing a major transformation.

Demographic Aging: Economic Impacts and Investment Opportunities

Experts: Arelis Agosto (Global X), Avinash Amin (Madryn Asset Management), John Hall (T. Rowe Price)

Moderator: René Beaudry (Normandin Beaudry)

The aging population will reshape healthcare demand in the coming years, with demand likely to outstrip supply. Experts discussed technologies that are expected to advance worldwide in response to the aging of the world’s population and the opportunities for public equities compared to private markets in response to this demographic trend. Industries such as senior living are going to benefit from this demographic shift. Additionally, the artificial intelligence sector in healthcare, which can streamline operational tasks, will enable healthcare workers to devote more time to patient care. Data analysis tools and assets are set to play a crucial role in deepening our understanding of diseases, enhancing treatments, and discovering new therapeutic pathways. While drug services tend to be concentrated within certain ecosystems where governments have stronger negotiating power with healthcare providers, the demand for healthcare is expected to expand across all economies to meet the needs of the aging global population.

Which Technologies to Develop to Achieve Carbon Neutrality

Experts: Jacques Bernier (Teralys Capital), Anne-Marie Monette (RBC Capital Markets), Tom Rand (ArcTern Ventures) Moderator: Amr Addas (Concordia University)

The panel provided an overview of the sustainable finance landscape, emphasizing the urgency for the financial sector to make a technological pivot towards carbon neutrality. The experts highlighted the importance of directing capital towards high-emission zones and the crucial role of stakeholders in key sectors such as real estate and transportation. Investment and divestment issues were addressed, focusing on energy efficiency solutions. Public markets also represent a significant area for transformation, where corporate responsibility and transparency are demanded. With the emergence of new technologies, a strategic realignment may be necessary regarding corporate focus and technological adoption. More accurate data will allow investors to identify better opportunities for impactful change. The experts also discussed the financial markets’ stance on the nuclear energy sector and its role in the energy transition.

New Technologies—Real Assets Management and Adaptation to Climate Change

Experts: Dominic Chalifoux (Axium Infrastructure), Andrea Gruza (Bonnefield), Gabriel Millard (Avenue Living)

Moderator: Michel Magnan (Université Concordia)

The experts on this panel discussed the use of technology in their specific field. They explored significant challenges related to the integration of new technologies as well as the effects of climate change on the predictability of operations and asset performance. AI and deep energy renovations can be a key element of change in agriculture, equity markets and infrastructure. In Canada, the valuation of agricultural land is on the rise, and farmers want to innovate in order to improve their profitability by focusing on the development of cost-effective technologies. The panelists emphasized the issue of data accessibility for smaller operators in order to invest in advanced technologies in their operations.

Artificial Intelligence in investment - challenges and opportunities

Experts : Valérie Cecchini, CFA (BOREALIS), Olivier Gandouet (TD Asset Management)

Moderator: Pierre‐Philippe Ste‐Marie (Bodhi Research)

During this panel on AI in the investment sector, the two experts examined, among other topics, the most suitable models for integrating into investment processes while considering the risks associated with adopting AI in these processes. They discussed the challenges of managing exponentially growing data sets and the need for portfolio managers to rethink their methodologies. Questions arise: Should AI be used for stock selection, regulatory compliance, or fraud detection? Generally, AI can indeed enhance market efficiency during stable periods, but it can also lead to a significant decrease in portfolio performance during disruptions. Therefore, employee training and proper governance are crucial to prevent misinterpretation of data by algorithms. According to these two experts, vigilance and human expertise remain essential to manage these risks, ensure responsible use of AI, and maintain high-quality portfolio performance.

The End of the Era of Low-Cost Money and the Impact on Asset Allocation Dynamics

Experts: Candice Bangsund, CFA (Fiera Capital), Peter Letko, CFA (Letko Brosseau)

Moderator: Miville Tremblay, CFA (CD Howe & CIRANO)

Assuming that interest rates will be on average higher over the next five to ten years compared to the period following the great financial crisis, the panelists discussed the reasons for this rate increase and its potential impact on different asset classes. The experts elaborated on deglobalization with a compromised supply chain, the green transition in many investments, and the effect of demographic change. The discussion highlighted the major increase in private investment and the importance of private exposure for investors beyond bonds and stocks.

 

We thank Carl Robert, CFA, who led the organizing committee of this unifying event focused on the future!

View the photo album

Thanks

This first edition of the Innovation in finance Forum was presented by Autorité des marchés financiers, as well as BMO Global Asset Management and Deloitte. CFA Montreal also thanks its annual sponsors for their support:

• CDPQ
• Desjardins Global asset management
• Finance Montréal
• PSP Investments
• PBY Capital
• Mackenzie Investments
• Addenda Capital
• BMO Global asset management
• Fiera Capital
• TransCanada Capital
• Beneva