An Actively Managed Certificate (AMC) is a structured financial instrument that securitizes an actively managed investment strategy into note form. In practical terms, an AMC is a debt security (note or certificate) issued by a financial institution (often a bank or an affiliated issuer entity) whose payoff is linked to the performance of an underlying reference portfolio selected by a professional manager. This underlying portfolio is actively traded and rebalanced over time according to a defined strategy or mandate. Investors hold a tradeable certificate with an ISIN code that reflects the value of the managed portfolio
Critically, an AMC allows the strategy manager to change the composition of the underlying basket without issuing a new security each time. The note is typically structured as a tracker (delta-one) on a notional portfolio or index that the manager controls. For example, the manager can rotate the portfolio from stocks to bonds, add new securities, or adjust weightings, all within the existing certificate’s legal wrapper. These ongoing adjustments are reflected in the certificate’s value in real time. This feature sets AMCs apart from static structured notes.
Distinction from Traditional Structured Products: Traditional structured products (e.g. autocallable notes, capital-protected notes) usually have a predefined payoff formula and a fixed set of underlying assets determined at issuance. In contrast, an AMC has no preset payoff formula or maturity payoff condition; it simply delivers the linear (possibly leveraged) performance of the underlying managed portfolio (minus any fees). There are no guarantees; the investor’s outcome depends on the skill of the manager and the market’s movements of the chosen assets. In essence, an AMC is a “participation” product investors participate in the gains or losses of the evolving reference portfolio, much like they would in a managed account, except delivered via a note. This means no capital protection or fixed coupons are typically offered, unlike many structured products. The trade-off is that the strategy can be dynamic and responsive, rather than static.
Distinction from Funds: AMCs also differ from traditional fund vehicles (mutual funds, ETFs, etc.). Legally, AMC investors are creditors of the issuer (bank or SPV) rather than beneficial owners of the underlying assets. The AMC provides synthetic economic exposure to those assets. This synthetic structure often allows lower regulatory overhead (as discussed later) and much faster setup. Unlike a UCITS fund which must comply with diversification limits and extensive regulations, an AMC has no strict asset eligibility or diversification rules beyond what the issuer permits. For example, an AMC can theoretically include illiquid or alternative assets (real estate, loans, crypto, private equity) that many funds cannot touch. The flip side is that investors bear the credit risk of the issuer (since it’s a debt obligation). If the issuing bank or vehicle fails, the investor may not fully recover funds, a risk not present in segregated fund structures. In practice, issuers mitigate this risk via collateral provisions or using bankruptcy-remote SPVs, but counterparty risk remains a defining consideration of AMCs.
Financial institutions across Europe, Asia, and Africa are increasingly turning to AMCs as a strategic product offering to complement or even replace traditional investment products. By offering AMCs, banks and dedicated issuance platforms (like securitization vehicles) can unlock multiple benefits: new revenue opportunities, differentiation through innovation, deeper client engagement, and asset-management-like capabilities, all with a scalable, capital-light model.
One of the most compelling reasons for banks to offer AMCs is the fee-based revenue they generate. Much like other structured products, AMCs allow the issuer to charge various fees for structuring and maintaining the product. Typically, a bank will earn an upfront structuring or issuance fee, as well as annual management/administration fees embedded in the product (often a percentage of assets under management in the AMC). For example, an issuing bank might charge an annual platform fee of 0.2% – 1.0% on the assets in the AMC, which directly contributes to recurring revenue. In addition, because the bank (or its market-making affiliate) handles trade execution for the AMC’s portfolio, it can capture trading commissions or bid-ask spreads on those transactions. If the AMC is listed or traded OTC, the bank may also act as the market maker, earning a spread on secondary market trades.
Crucially, this revenue comes with limited risk exposure for the issuer. The market risk of the portfolio is borne by the investors in the AMC, not by the bank’s balance sheet, the bank’s role is to facilitate the strategy and pass through the performance. Aside from short-term liquidity provisioning or hedging while executing trades, the bank isn’t taking directional positions. This means the fee income has attractive margins. AMCs allow banks to monetize their structuring and trading capabilities in a relatively low-risk way. The result is often a high return on equity for the AMC business line.
To illustrate the scale, consider a bank that accumulates the equivalent of USD 5 billion across various AMCs on its platform, not an unrealistic figure in today’s market. At an average fee of 0.5% per annum, that yields about USD 25 million in steady annual revenue, with high profit margins due to vestr’s automation and low capital usage. It’s easy to see why many private banks now view “AMC platforms” as a service offering in itself: the more external asset managers or advisors they onboard to launch strategies via AMCs, the more assets and fees accrue.
In an investment product marketplace crowded with funds and look-alike notes, AMCs give banks a chance to stand out through innovation. The flexibility of an AMC’s structure means issuers can rapidly design and launch new thematic or bespoke strategies without the lengthy setup of a fund or the complex payoff engineering of a typical structured note. This enables a bank’s product development team to be extremely agile and responsive to market trends.
For example, if there is sudden client interest in a niche theme, say “artificial intelligence in healthcare”, a bank could roll out an AMC that actively invests in a basket of AI-focused healthcare stocks and related assets. With an existing AMC issuance program, the bank might seed the strategy and issue the certificate in a matter of weeks. By contrast, creating a new fund product (even an ETF) could take many months and risk missing the market window. This speed-to-market is a significant advantage, allowing new investment ideas to be introduced swiftly while the theme is hot.
Additionally, because the underlying portfolio can be tweaked on the fly, an AMC can evolve over time (e.g. rotating sub-themes or adapting to market conditions) without launching a new product each time. This means a single AMC can stay relevant longer and serve evolving client needs, further differentiating the bank’s offerings. Banks have used AMCs to roll out “trend baskets” that are periodically adjusted by the manager as the trend evolves, something static products cannot replicate.
Beyond thematic investing, AMCs allow mass customization of products. A bank can create one-off strategies for specific clients or segments and deliver them as proprietary products. Traditional providers might say “no” to an unusual client request due to operational constraints. This capability turns bespoke portfolio management into a packaged product, setting the bank apart from competitors.
This kind of product differentiation helps position the institution as a market leader and innovator. It can improve client acquisition (“come to us, we can build what you need”) and also earn media/industry recognition for being on the cutting edge (for instance, early adopters of including digital assets or AI strategies in AMCs are often highlighted in industry conferences).
From a client relationship perspective, Actively Managed Certificates serve as a powerful tool for engaging clients and delivering customized solutions. Private banks and wealth managers know that ultra-high-net-worth (UHNW) clients increasingly demand bespoke portfolios and unique opportunities. AMCs provide a regulated, convenient wrapper to fulfill these demands on a one-to-one or segment-of-one basis. Rather than placing a client’s assets in off-the-shelf funds, a bank can co-create an investment strategy with the client and package it as an AMC, effectively turning the client’s vision into a product that the bank administers.
This level of customization deepens client trust and loyalty. The client feels they are getting something tailored exactly to their preferences (be it ethical exclusions, specific themes, risk level, or leverage), and the bank becomes more of a solutions provider than just a distributor of third-party products. As noted earlier, AMCs enable providing a customized managed account but in security form, even for a single investor. Because the AMC is a transferable security, if that one investor eventually steps out, the bank can offer the same strategy to others, making it feasible to sustain a highly personalized strategy. This is a key advantage over classic managed accounts or mandates, which might be unwound if the client leaves; here the strategy can live on as a product, ensuring continuity and scalability.
AMCs also contribute to client retention and attraction of talented asset managers. For instance, relationship managers or portfolio managers at private banks often have great strategy ideas. In the past, if they wanted to manage money more freely, they might leave to start a fund or a boutique. The bank issues the AMC for them, the PM gets to run their investment vehicle without leaving, and the clients get access to this strategy. It’s a win-win-win: the banker stays (talent retention), the clients are happy with unique strategies, and the bank earns fees while strengthening its team’s loyalty. Similarly, independent external asset managers (EAMs) are drawn to banks that offer vestr’s strong AMC platform: they will bring client business to that bank’s AMC issuance infrastructure if it’s efficient and wide-ranging, increasing assets under custody and overall client connectivity for the bank.
Furthermore, by listing certain AMCs on public exchanges or multi-dealer platforms, banks can engage new client segments beyond their own private clientele. As an example, a bank can issue an AMC and list it on the SIX Swiss Exchange, making it visible to any investor with access to those markets. Independent financial advisors, smaller institutions, or affluent retail investors can then discover and invest in those AMC products. This expanded distribution broadens the bank’s reach and can funnel new clients back to the bank (investors who buy the AMC might eventually seek more services). Some issuers have indeed listed AMCs on multiple exchanges specifically to tap into wider demand and raise their profile in the market. The end result is greater client engagement on multiple fronts: existing clients get bespoke solutions, and new clients are engaged through differentiated products and wider distribution channels.
Actively Managed Certificates blur the line between a bank’s structured product desk and an asset management house. By offering AMCs, banks effectively gain asset management capabilities without needing to set up new fund vehicles. The structured products or securitization team, working with vestr and strategy providers, can create and run numerous distinct portfolios within the AMC wrappers, much as an asset manager runs different funds or mandates. This is extremely powerful from a strategic standpoint: it allows a bank to verticalize its value chain (manufacture products, not just distribute others’) and potentially capture more value.
With vestr’s platform, a single operational setup can support thousands of AMCs, each with a different strategy or manager, without significant additional overhead. The bank becomes a platform for strategy providers (internal or external), akin to running a multi-strategy asset management business on its balance sheet or via its vehicles. Crucially, each AMC can be launched with minimal seed capital (since external investors provide the funding) and low setup cost, unlike traditional funds which often need seed money and critical mass to start. This means even niche strategies can be tried and, if successful, scaled up by attracting more investors.
From a scalability perspective, the AMC model is highly efficient and leverageable. Once the legal issuance program (e.g. a note program or securitization vehicle) is in place, adding a new strategy is mainly a matter of drafting terms and an investment management agreement. Many banks report that launching a new AMC can be done in days and with modest internal effort, thanks to standardized documentation and automation. Moreover, ongoing administration (NAV calculation, portfolio reconciliation, etc.) can be largely automated or handled by a small team, even as the number of AMCs grows. It is not unusual for a bank to host dozens or even hundreds of external managers on its AMC platform simultaneously, each managing their own strategy under the bank’s issuance umbrella. Every additional strategy adds fee income but only marginal operational load.
The ability to include virtually any asset class in AMCs is another differentiator. Want to offer clients exposure to pre-IPO shares, or a basket of hedge funds, or a mix of public and private debt? Doing this in a regulated fund could be infeasible or take years of structuring, but via an AMC it can often be achieved rapidly by referencing those assets in a certificate (assuming the bank can trade or hold them or has an external partner to do so). This means banks can package alternative investments and proprietary strategies without setting up new fund vehicles, tapping into areas normally reserved for specialized asset managers. In effect, the bank can replicate many functions of a global asset manager (multiple strategies across asset classes) just by utilizing the flexible wrapper of AMCs.
Finally, offering AMCs positions the bank as a “solutions platform” rather than just an intermediary. Internally, this fosters a culture of innovation and collaboration between the structuring teams and investment teams. By implementing this, banks transform into product manufacturers, not merely distributors, capturing more value chain and achieving a higher share of client wallet (e.g. providing advice and product execution). The strategic value of this repositioning is significant in an industry where margins on plain brokerage or distribution are shrinking.
