There are already a number of options for making unusual assets bankable and available to investors. Traditionally, an asset manager would look for individuals or institutions to invest directly in your business, real estate, or any other asset of your choosing. You can move your assets to a regulated investment vehicle, such as a fund, or, in the case of a corporation, publicly list them as shares.
Actively managed certificates (AMCs) are no newcomers to the structured products market. Due to their versatility, cost-effectiveness, and application possibilities, they have experienced rapid expansion in recent years. The new product generation gives you more alternatives when it comes to customizing your investing strategy.
An asset manager can manage a client’s bankable capital in a variety of ways. Generally, a client gives the asset manager authority to manage the client’s preferred bank deposits. This method allows the client to examine all of the portfolio’s positions and movements.
Individual customer accounts, on the other hand, are not scalable for asset management and may become difficult and inefficient as the number of clients grows. Furthermore, because some securities have a large minimum investment amount, they are not suitable to every client with a diverse portfolio. These are some of the reasons why many asset managers seek to develop their own investment vehicles, which allow them to distribute their investment approach to several investors.
However, because of various limitations, such as expensive set-up fees, insufficient flexibility, and legal restrictions, many well-known and widely used fund structures are neither accessible nor viable in many circumstances. Actively managed certificates are a solution that overcomes these restrictions and has gained popularity in Switzerland during the last decade.
Actively managed certificates are structured securities with an underlying asset that is managed on a discretionary basis in accordance with a stated investment strategy throughout the product’s life cycle. Actively managed certificates get issued by investment firms or their special purpose vehicles (SPVs). The issuer synthetically implements its investment strategy through a third-party investment plan (the “AMC Advisor”), with the AMC Advisor having the ability to assemble and restructure the underlying asset in accordance with the investment strategy’s framework. The advisor’s ability to (synthetically) implement the investment plan determines the AMC’s performance.
Like other structured securities, an AMC investor has no remedy against the underlying asset, but only against the AMC issuer or guarantor up to the amount of the guarantee.
AMCs have an International Securities Identification Number (ISIN) and can hold nearly any type of asset as an underlying. Through a bank deposit, the ISIN makes them available to qualified, institutional, and professional investors. AMCs, unlike other investment products, can be launched in a matter of weeks for a wide range of investment strategies with essentially no-issuance expenses for the asset manager. AMCs also provide ongoing cost savings due to their effective management and are widely available for investors with minimal minimum ticket quantities.
AMCs VS Investment Funds
AMCs combine the benefits of structured goods with characteristics that allow for flexible component change within the underlying framework. They are the investment product of choice for establishing investment strategies with low seed money since, unlike investment funds, they can be formed in a quick and cost-effective manner.
Another distinction from investment funds is that, because AMCs are derivative securities, their distribution and marketing are governed by the Prospectus Regulation rather than UCITS or the AIFMD. As a result, any investment strategy can be repackaged into an Actively managed certificate for public retail selling, as long as the underlying is transparent and liquid: asset managers have a lot of freedom when it comes to putting together their investment plan. Securities from several asset classes, such as liquid stocks, less liquid bonds, alternative funds, and derivatives, may be combined by the asset manager. Long/Short Equity, CTA Trading, Global Macro, FOREX Trading, Event Driven, and asset classes such as digital assets are now all examples of hedge fund strategies offering AMCs. Diversification rules are significantly more flexible than they are in UCITS, permitting the development of actively managed certificates based on an actively managed concentrated portfolio — a perfect investment vehicle for activist shareholder tactics. Furthermore, embedded leverage and regular coupon payments might be included in the custom certificates. They could also be protected against currency fluctuations. The asset manager gives the issuer the portfolio’s initial composition as well as any subsequent revisions.
Individualization Is Achieved With Feeder Certificates
Using a single AMC as a basis, even the needs of investors with various risk profiles and preferences can be met. For each customer profile, a so-called feeder certificate is plugged into the basic AMC, keeping the entire structure cost- and time-effective.
Within the AMC, the asset manager implements the core investment plan. A leveraged feeder certificate is offered to risk-seeking investors who want to increase their exposure to the underlying investment portfolio. The certificate contains the leverage. It is non-recourse and can be static or dynamically changed to maintain the same level of exposure to the underlying portfolio.
A capital-protected variant of the AMC may be preferred by conservative investors. Furthermore, feeder certificates can be used to hedge duration or foreign exchange risks, as well as to establish distributing and non-distributing vehicles.
Simply said, the asset manager has a variety of possibilities for customizing his underlying investing approach.
Thus, actively managed certificates give intermediaries a lot of freedom when it comes to customizing investment strategies. High-yield AMC or emerging market bond portfolios, as well as those with embedded leverage utilized for yield optimization or duration reduction, are now in strong demand.
In recent years, the emergence of the Longevity Industry has made itself known to both institutional and smaller-scale investors, however, many hurdles prohibit the sustainable allocation of capital to the industry.
Deep Knowledge Group has recently launched its own AMC called Deep Knowledge Longevity AMC, which is designed to reflect the dynamics of the Longevity sector. The outstanding performance of the industry has shown a clear need for the creation of financial products that will allow investors to benefit from the development of the sector and launch Longevity into the mainstream. AMC constituents are companies spread between 20 sub-sectors of the Longevity Industry, varying from fighting aging to advanced preventive precision biomedicine. DKG functions as an issuer and administrator of the AMC, creating certificates, adjusting portfolios, functioning as a market maker, and continuously calculating the strategy’s performance.
The development and launch of the Deep Knowledge Longevity AMC is possible because of Deep Knowledge Group’s analytical expertise. The investment management of the Deep Knowledge Group’s AMC is being conducted based on the diverse system of databases and analytical tools developed for this purpose, as well as with the full support of some of the best experts in the Longevity industry and investment technologies.
Key features of Longevity AMC:
Advanced AI-driven investment techniques
Low entry cost (retail investors)
Taking into consideration all the benefits of the AMCs as an investment vehicle, we can only say that it is reliable and comfortable instrument for investments used by professional or sophisticated investors, which will be even more popular in the future.