On the Web
May 8, 2023

A fintech transformation for Actively Managed Certificates (AMCs)

After collaborating with F10, the Swiss fintech incubator, Julius Baer has developed in cooperation with Vestr AG a platform that will help intermediaries to manage Actively Managed Certificates (AMCs) far more efficiently.

Nic Dreckmann, COO & Head Intermediaries; Luigi Vignola, Head Markets

Q. Could you please describe your collaboration with F10, the Swiss Fintech incubator?

ND: “F10 is an incubator based in Zurich backed by the SIX Swiss Exchange, Julius Baer, some insurance companies and even some consulting companies. It has been operating for three years and brings Julius Baer close to the fintech ecosystem in Switzerland. It gives us the opportunity to put the challenges we face in our companies to the fintech ecosystem – everyone from academia, universities, students, already existing small companies – and to ask them to come up with ideas. Once an idea has been selected, we turn it into a prototype. Finally, we take the product to market. Julius Baer is close to all of these stages, mentoring the small companies or ideas throughout their life cycles.”

LV: “It’s a bit of a laboratory for us. We can throw in questions and see if somebody can come up with a smart solution without using too much of our own resources, which are largely committed to the day-to-day processes.”

Q. What benefits has F10 yielded to date?

LV: “We are working with F10 on a range of promising projects. The collaboration with a company called Vestr is the most advanced. Together with this fintech we have developed a platform that allows our intermediary clients to run actively managed certificates, or Actively Managed Certificates (AMCs), far more efficiently than currently possible.”

ND: “Luigi came up with the challenge of finding a better way to manage actively managed certificates than using Excel spreadsheets and a young start-up proposed various solutions. We spent a while brainstorming and understanding how to collaborate. Eventually, we decided to enter a partnership with this start-up with the aim to develop a digital solution to allow intermediaries to manage their own actively managed certificates.”

Q. When will the platform be available to intermediaries?

LV: “The platform is already in production and we have recently started onboarding existing clients. However, the plan is to further develop the tool with additional features and functionalities to be able to provide the only end-to-end platform for Actively Managed Certificates (AMCs) by the first quarter of 2020.”

Q. What will intermediaries be able to do that they couldn’t before?

LV: “We observe that more and more bankers are starting their own shops, especially in Asia. Some of them are opening with 20, 50, 100 clients and assets under management north of USD 100 million. At that amount of money, Actively Managed Certificates (AMCs) provide a very cost-efficient solution that enables the intermediary to execute its investment strategy across all its client portfolios. It is a more flexible and less expensive alternative to investment funds. Additionally, there is no need to set up a legal entity in a specific jurisdiction or appoint an administrator. An Actively Managed Certificates (AMCs) can be set up from Julius Baer’s issuing program within a matter of weeks.

The platform empowers the intermediary to manage its Actively Managed Certificates (AMCs) in a highly performing and intuitive way. It delivers all the functionalities needed to monitor the products in real-time and respond instantly to market changes or a product’s concentration barriers. Rebalancing the certificates is possible with just a few clicks.

From a risk management perspective, it is worth mentioning that the tool also offers a great transparency throughout the entire lifecycle of the products such as corporate actions and fees.

In terms of reporting, the intermediary can create customised real-time reports to share with its clients, as opposed to end of month or quarter reports, typically provided by the fund houses.

The intermediaries that are using the tool have provided very positive feedback, they just love it. It makes managing v really fast and efficient.”

ND: “The tool also reduces the size of assets required to justify launching an Actively Managed Certificates (AMCs). In the old world, you needed USD 10 million – 15 million to issue an Actively Managed Certificates (AMCs), depending on the strategy. With the new platform, it makes sense to launch an Actively Managed Certificates (AMCs) with as little as USD 5 million.”

Q: Are you working on any other ideas with F10 that might benefit intermediaries?

ND: “There are plenty of ideas in the pipeline. We are also looking at a very innovative way to match fixed income orders based on AI technology. Another example is Lendity, a company that digitally securitizes debt. Our treasury department has subscribed to a tranche of this debt, which offers similar returns to other debt but at significantly lower risk. That is obviously a potential investment for clients as well. Our intention in working with F10 is to put forward the challenges we have and have them looked at by a third pair of eyes; to see how things could be solved in a different way.”


Originally posted on Julius Baer

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