The world of asset management has undergone a significant transformation over the last decade, and at the heart of this change lies the rise of Actively Managed Certificates (AMCs). These innovative financial instruments have become a powerful tool, particularly for smaller and medium-sized asset managers, providing a critical alternative to traditional fund structures. Their growing popularity is a direct response to a major regulatory shift that reshaped the European financial landscape.
The story of the AMC’s rise begins with the European Union’s comprehensive reform of collective investment scheme regulations between 2009 and 2013. The Alternative Investment Fund Managers Directive (AIFMD), in particular, was amended to mandate that virtually all asset managers be regulated. While well-intentioned on paper, this regulatory move created a significant barrier for smaller firms that had previously operated under a more lenient regime. Many were forced out of business, as the new regulations were prohibitively costly and complex to comply with. This created a monopolistic environment, favoring large financial institutions.
In response to this challenge, a solution emerged from Switzerland. A business-friendly regulatory approach allowed for the packaging of a managed portfolio into a single security. These instruments, which can go by many names—such as portfolio-linked notes or tracker certificates—offered a way for boutique asset managers to continue their operations and retain their investors. The key innovation, and the primary reason for their explosive growth, is that the Swiss financial market regulator, FINMA, does not classify these securities as “collective investment schemes.” Also, they do not require a regulated asset manager, sidestepping the very regulation that crippled many EU firms.
The person responsible for managing the portfolio underlying an AMC is often referred to as a “strategy sponsor.” This framing positions them as a side consultant providing advice on the portfolio’s composition, rather than a full-fledged fund manager. This progressive and flexible approach has allowed Switzerland to attract a significant amount of asset management business away from the bureaucratic EU.
The Structure and Jurisdiction of AMCs
AMCs are typically issued by a special purpose vehicle (SPV), a legally separate entity created for this specific purpose. The SPV holds the underlying assets and issues the certificates to investors. The choice of jurisdiction for incorporating this SPV is critical. The Cayman Islands has emerged as the definitive leader in this space, offering a favorable and well-established legal and corporate framework.
While other jurisdictions like Guernsey are legally viable, they can present operational challenges. For example, local corporate providers may insist on appointing their own directors and managing the trust that controls the SPV. This arrangement can be uncomfortable for the strategy sponsor, as it limits their control over the structure and its assets. Hong Kong SPVs may also be used, but they are generally better suited for securities with a less actively managed, more static underlying portfolio.
Ultimately, AMCs represent a clever and effective adaptation to a changing regulatory environment. They have not only provided a lifeline for small and medium-sized asset managers but have also introduced a more agile and accessible investment vehicle to the market.
Tiner Wernow, formerly John Tiner & Partners, designs and creates securities and other financial instruments. We help our clients raise capital, sell managed trading strategies, and securitize all types of assets.
We provide a complete service, from developing the initial structuring concept to its full implementation, which includes ISIN, issuance, global clearing, exchange listings, and placement routes. We help to package any asset or investing idea into easily tradable, globally cleared securities. We offer issuance, brokerage, and SPV maintenance services in various jurisdictions.
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