What has spurred the growth in Actively Managed Certificates (AMCs) in recent years? Asset Managers Alessandro Cavuoto and Matteo Citterio from WMM tell us why these products are perfect for implementing investment ideas quickly – especially using Julius Baer’s new EPIC tool.
The market for AMCs has experienced tremendous growth over the past decade, reaching a trillion Swiss francs in assets globally over the past few years. This shift towards AMCs has principally been driven by three factors: quicker time to market, lower asset requirements, and the minimal cost of set-up and administration.
Alessandro Cavuoto and Matteo Citterio are asset managers at Wullschleger Martinenghi Manzini (WMM), an asset management company and integrated services consultancy based in Lugano. “When Julius Baer presented the AMCs to us, the concept was very new to us,” says Matteo. “But launching a new fund had become increasingly difficult and expensive in the last 5-10 years, and as asset managers, we were looking for some kind of hybrid and less heavy structure in order to make asset managing more efficient.”
As Alessandro explains, the lack of bureaucracy involved in setting up an AMC is a significant advantage for asset managers: “As an asset manager, sometimes you have a ‘thesis’ about a particular investment strategy to follow. But to run this kind of thesis, you need a product that can be ready in a few weeks, rather than a few months. AMCs have characteristics very similar to a fund but can be built in a few weeks with much less bureaucracy.”
AMCs are also a relatively low-cost way for asset managers to execute their strategies and improve the diversification of the portfolios that they manage.
“Setting up a traditional investment fund has high one-off costs so it needs to be a significant size before it’s justified,” says Matteo. “Typically, you’d be looking at an asset base of at least CHF 50-100 million. However, due to their lightweight nature, AMCs can usually be set up with a comparatively small investment and then grown along the way.”
Julius Baer is an innovator in this exciting movement, providing asset managers with an end-to-end platform for managing them: the Electronic Platform for Investment Certificates (EPIC). The platform, developed in collaboration with vestr AG, combines years of detailed hands-on industry knowhow with cutting-edge technology. It enables asset managers to manage their AMCs in a powerful and intuitive fashion and provides them with all the functionality they need to monitor their products in real-time and to react to market changes instantly.
EPIC adapts to your workflows and automates time-consuming interactions, including:
- Full overview of all AMCs via the dashboard
- Choice of 1 million traded instruments to rebalance AMCs
- Customisable real-time reports on the composition and performance of your AMCs
- Instant feedback on title selection, orders, and trade executions
For Alessandro Cavuoto, the creation of EPIC has proved to be a real turning point in AMC management, giving asset managers greater flexibility and control over their portfolios. “This platform enables managers to access the AMCs 24 hours a day, 365 days a year,” he says. “It is very user-friendly and the team responds to the orders almost immediately. The manager can send orders, check execution, and modify the AMC in a very simple way. He can also generate the new report just minutes after rebalancing.
Strong track record
Julius Baer has an extensive track record of experience and competence in the field of AMCs and investors can buy Julius Baer AMCs through virtually any custodian bank, with the minimum size starting at USD 10 million for a tailor-made product and at USD 5 million for a ‘plain vanilla’ product (or the equivalent in almost any other currency). The Bank’s AMCs cover a wide range of underlyings and offer the possibility for combination across asset classes.
The Bank has been issuing AMCs for over ten years and, at the last count, has over 164 outstanding AMCs. This proven track record and full lifecycle management is a huge plus for asset managers and investors alike: “Julius Baer has a great reputation with ourselves and our clients so its function as an AMC issuer is a guarantee for all parties involved,” says Matteo.
WMM was one of the clients involved in piloting EPIC and was impressed by Julius Baer’s willingness to involve clients in fine-tuning the platform. “Julius Baer clearly knows that the best way to create something excellent is to work closely with the asset managers and grow the structure together,” explains Alessandro.
“Since then, we have taken many steps forward and the team is very focused on helping managers in every way possible to put their ideas into their products and unlock the best value for clients. Ultimately, Julius Baer was able to build a platform that can offer a great product at a very reasonable price.”
- The market for AMCs has seen tremendous growth in recent years, reaching a trillion Swiss francs in assets globally.
- Julius Baer has taken a significant step forward by enabling true active management of AMCs with the launch of EPIC.
- The tool was developed in collaboration with vestr AG and the project involved WMM during the pilot phase.
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