Over the last few years I have spent a great deal of time both structuring Actively Managed Certificates (AMCs) and being involved in the running of UCITS funds. One observation keeps returning to me: the most robust way to set up and run an AMC is to apply many of the same principles that govern a UCITS fund.
In other words, it helps to think with a UCITS hat on when structuring an AMC.
AMCs are often viewed purely as structured products, with the appealing ability to be launched rapidly, designed flexibly, and distributed efficiently. While these characteristics are valuable, they can sometimes lead to an overly “trading-led” mindset rather than an “asset management” mindset.
In my view, the best AMCs are run by applying the principles borrowed from the funds world.
The UCITS framework has, over decades, developed a set of disciplines that protect investors and improve the quality of the portfolio management. These include, among others:
- Independent oversight
- Transparency of valuation
- Robust risk management processes
- Separation of roles such as administration and custody
- Overarching product governance
- Clarity on costs and investor value
While an AMC does not sit inside the UCITS regulatory framework, there is no reason why many of these principles cannot be voluntarily adopted.
At Gilderstone Securities, when we think about the design of securitisation vehicles used to issue AMCs, we think carefully about how to replicate the operational robustness typically associated with fund structures. This means focusing on areas such as:
- Independent NAV calculation and administration
- Clear governance and defined responsibilities
- Robust risk monitoring and portfolio transparency
- Institutional-grade service providers
- A structure that investors can understand and trust
In other words, the aim is to combine the flexibility of a securitisation-issued AMC with the discipline of a traditional fund structure.
For asset managers and investors alike, this approach offers a compelling middle ground. AMCs can provide speed, efficiency and strategy flexibility, while fund-style governance can provide the operational credibility that institutional investors increasingly expect.
As the AMC market continues to grow, I believe the managers who succeed will be those who treat these products not simply as structured notes, but as properly governed investment vehicles.
Applying UCITS-style thinking to AMC structures is, in my opinion, a natural evolution for the market.
At Gilderstone Securities we are fortunate to have the experience and expertise required to apply these principles when structuring AMCs. Please get in touch and discuss with us how we can structure your next AMC knowing you’ll receive the governance and operational robustness that it deserves.