- Below, we detail what ETPs and AMCs are and outline their main characteristics and differences.
- This information is aimed at asset managers looking to gain a deeper understanding of investment vehicles for distributing strategies.
- FlexFunds offers an asset securitization program for the issuance of ETPs. For more information, please do not hesitate to contact our experts.
In an environment where the sophistication of investment strategies is advancing faster than the traditional structures that support them, choosing the right vehicle becomes a critical decision for institutional managers.
In this context, customized Exchange-Traded Products (ETPs) have gained prominence over more conventional alternatives such as Actively Managed Certificates (AMCs).
What are the differences between a customized ETP and an AMC?
Customized ETPs (such as FlexFunds’ FlexPortfolio) are vehicles designed to securitize an investment strategy using liquid underlying assets.
The issuer uses a special purpose vehicle (SPV) that backs the investment with those assets, ensuring that the product remains independent from the manager.
In contrast, an Actively Managed Certificate (AMC) is likewise a structured instrument, but typically issued by a financial institution or specialized platform under a prospectus.
An AMC is a structured instrument linked to an actively managed portfolio, in which the manager has discretion to implement dynamic adjustments to the asset allocation within the certificate’s structure.
Both vehicles provide exposure to diversified portfolios, but they differ in their legal treatment: ETPs can offer regulated or unregulated versions for private placement, while AMCs are not regulated funds but rather certificates under securities regulations.
Customized ETP vs. AMC
- Objective: Customized ETPs aim to efficiently and transparently replicate the manager’s strategy using liquid public assets. AMCs, on the other hand, incorporate active tactics in a structured note format, facilitating highly customized thematic or multi-asset strategies.
- Structural design: An AMC is typically issued as a certificate physically backed by stocks, bonds, ETFs, or other listed instruments. The manager can include leverage and adjust the portfolio within the operating parameters defined by both the underlying brokerage account and the certificate documentation. An ETP is a securitized product: The originator transfers assets to an SPV that issues a certificate whose performance tracks that active portfolio.
- Issuer and regulation: Customized ETPs can be launched under a regulated license or as a private vehicle format. In both cases, they are issued with an international ISIN. AMCs, in turn, are issued based on an approved prospectus and hold a marketing passport in certain markets.
Costs and implementation timelines
One of the most notable advantages of customized ETPs is their speed of implementation and low cost.
For example, in FlexFunds’ case, the creation and launch of an ETP takes about 6â8 weeks, while an AMC requires more time due to its greater complexity and the involvement of third parties.
In addition, FlexFunds’ FlexPortfolio has no setup cost or maintenance cost, which makes it highly efficient in terms of initial fixed expenses.
- Launch time: Customized ETP (FlexPortfolio) approx. 6â8 weeks. AMC typically slower.
- Initial and maintenance costs: Unregulated ETP, setup can be as low as 0, minimal maintenance. AMC: possible issuance costs and management fees (generally higher than an ETP).
- Operational speed: In a customized ETP, the manager operates directly in their brokerage account with a high degree of flexibility. In an AMC, the manager executes the strategy within the certificate’s segregated account, but the process may involve the participation of the issuer or a designated broker, which can add friction.
Governance and operational control for the manager
When it comes to governance and control, there are important differences between the two models.
In terms of transparency, customized ETPs generally offer greater visibility into underlying positions.
This is because an ETP typically discloses its portfolio structure (in prospectuses or periodic reports), allowing the manager to understand exactly what the ETP is invested in.
In contrast, AMCs operate as a structured âwrapperâ; although they often provide daily valuations and reports (which advisors value for managing risk), the detail of the positions can be less accessible than in a regulated fund.
In fact, the composition of an AMC can be difficult to assess for managers and advisors, given that full visibility into the certificate’s terms is not always available.
Customized ETP or AMC: Which option should you choose based on the type of strategy?
The choice between a customized ETP and an AMC depends on the manager’s profile and the nature of the strategy:
- Liquid vs. alternative assets: If the strategy is based on liquid public securities (stocks, bonds, standard ETFs), a customized ETP is a very suitable option. It allows classic portfolios with high daily liquidity to be replicated or packaged.
Conversely, if the goal is to gain exposure to highly thematic portfolios or unconventional assets (for example, cryptocurrencies, exotic commodities, or private assets), AMCs offer greater flexibility.
- Manager profile: An institutional manager or a family office that values regulatory transparency and operational efficiency might prefer an ETP (especially if it is a UCITS/ETF structure with a European passport). In general, ETPs attract advisors who want to expose model mandates without creating a new fund.
On the other hand, private banks or boutique asset managers looking for a tailor-made product (with management and performance fees defined by them) may lean toward an AMC.
- Global reach: UCITS ETPs enjoy a European passport and access to platforms such as Euroclear, simplifying their marketing across the EU.
AMCs, meanwhile, are typically listed on specialized exchanges, but can be promoted across various jurisdictions. Notably, AMCs are gaining traction in Latin America precisely because they offer actively managed strategies in a format (ISIN) that is recognizable to local custodians.
- Operational flexibility: Managers with highly tactical strategies (fast sector rotations, intraday trading) will appreciate the speed of launch and management of a customized ETP. An ETP can be implemented in weeks and operate with continuous liquidity.
If the strategy is more long-term or requires specific tax/commercial structures, the AMC format offers customization options (such as multi-currency denominations and customized fee structures).
In all cases, it is worth evaluating factors such as the vehicle’s regulation, local tax treatment, secondary market liquidity, and cross-border compliance requirements.
To learn more about FlexFunds’ ETPs and its asset securitization program, please do not hesitate to contact our team of experts. We will be glad to assist you!.
Sources:
- https://www.flexfunds.com/flexfunds/how-is-the-flexportfolio-a-more-efficient-alternative-than-actively-managed-certificates-amcs/
- https://www.flexfunds.com/solutions/key-success-factors-for-the-securitization-of-assets/
- https://rankiapro.com/latam/insights/certificados-de-gestion-activa-amcs-la-flexibilidad-en-el-corazon-de-la-gestion-moderna-de-carteras/
- https://www.flexfunds.com/fund-world-news/flexportfolio-vs-amc/
- https://es.andersen.com/fiscalidad-de-los-exchange-traded-products-etp-al-hilo-de-la-cv0267-25-de-la-direccion-general-de-tributos/
- https://imaps-capital.com/actively-managed-certificates/
