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What are Actively Managed Certificates?

Long lasting debates about Active vs. Passive Investment Management have resulted in a diversity of investment types. All aim to better cater to a range of client needs. Actively Managed Certificates are the answer for cost efficient and flexible actively managed strategies.

Today, investors benefit from customized investment strategies that contain a variety of asset classes: equities, bonds, derivatives, as well as alternative and digital assets. With investors opting to allocate (some of) their resources with active portfolio managers, the demand for customized strategies rises. These asset managers apply an active portfolio management strategy with the goal to outperform an investment benchmark index or target return.

An alternative to funds emerged

A typical vehicle for such pooled investments has been investment funds. However, the high entrance barrier with large initial capital investments in addition to regulatory hurdles, let new forms of pooled investment opportunities emerge. The intersection of structured products, innovation and digitalization enabled the takeoff of one special type of product: Actively Managed Certificates or AMCs. Asset managers enjoy this new way of active investment management for its simplicity, flexibility, and customization.

For asset managers or institutions embarking on this new path of active investment management as well as existing players who already invest with AMCs, we summarized this new type of structured product in this series.

Actively Managed Certificates (AMCs) are securitized portfolios that portfolio managers dynamically adjust at their own discretion or according to index pre-set rules.

Issuers can launch AMCs as on- or off-balance sheet certificates. Either privately placed or exchange-traded.

AMCs have many names and strategies

In recent years, AMCs have become the vehicle of choice for investment managers. They are seeking to customize strategies according to their clients’ needs. Experts know AMCs under different names such as Exchange Traded Notes, Exchange Traded Instruments, Dynamic Equity Notes, Strategy Notes, Strategy Index Certificates, and Actively Managed Trackers. They are structured products with a return dependent on the underlying’s performance with basis values.

Beyond mirroring actively managed funds or indices, AMCs are increasingly used for non-bankable assets. Such as cryptocurrencies, art, and illiquid assets or for combining various asset classes.

This allows portfolio managers to dynamically setup and adjust different investment strategies for their clients.

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