The rise of stock exchange listed Actively Managed Certificates has just started – iMaps Capital Markets (2024)

• ByAndreas Woelfl

Actively Managed Certificates have been enjoying increasing popularity among investors and asset managers for years. They combine the advantages of structured products with features that enable flexible adjustment of investments within the underlying portfolio. In contrast to investment funds, they can be set up quickly and inexpensively and are therefore the investment product of choice for implementing investment strategies with lower seed capital – starting as low as just one millionen Euro. Actively Managed Certificates can be brought to market particularly easily with the help of white label providers such as iMaps Capital Markets.

Actively Managed Certificates enable the public offering of hedge fund strategies

Another difference to investment funds is that the distribution and marketing of Actively Managed Certificates as structured securities is not subject to either the UCITS or the AIFM Directives. The prospectus regulation applies to them. Therefore, any type of investment strategy can be packaged into Actively Managed Certificates for public distribution, as long as the underlying assets are transparent and liquid. This even includes hedge fund strategies such as long/short equity, CTA trading, global macro, forex trading and event driven. Even Crypto coins can be an asset of the portfolio. The diversification rules are far more flexible than for UCITS funds and allow the launch of Actively Managed Certificates of actively managed concentrated portfolio – an ideal investment instrument for investment products with a focus on specific themes.

How does the launch of an Actively Managed Certificate work?

Actively Managed Certificates are issued by financial institutions. In contrast to collective investments such as equity funds, these are structured securities. These reflect the performance of an underlying that has been predetermined at the request of the asset manager. Each Actively Managed Certificate therefore has an underlying with a separate ISIN to which it is linked. In this context, “active” means that an asset manager can change the portfolio allocation within the underlying on a discretionary basis – for avoidance of doubt that includes intraday adjustments.

By the way, the choice of the “product typ” structured security does not mean any compromises in terms of security in the iMaps Capital Markets issuance program: iMaps pledges 100% of the portfolios to Intertrust Group for the benefit of the investors in the Actively Managed Certificates and thus launches them as 100% collateralized. This means the credit risk of the Issuer – often rightly criticized at standard bank certificates – is taken out of the equation.

Actively managed certificates as a white label solution

Issuers of Actively Managed Certificates, including iMaps Capital Markets, offer the launch and listing as a white label solution. An independent investment manager acts as strategy sponsor. The investment manager defines the investment strategy of the Actively Managed Certificate and ensures continuous reallocation of the portfolio. In most cases, the investment manager is also responsible for the marketing and distribution of the security, but may also appoint a distributor. The issuer, for example iMaps Capital Markets, structures, dematerializes, manages and lists the Actively Managed Certificates on an exchange – in case of iMaps on the Stuttgart Stock Exchange, Europe’s largest exchange for Actively Managed Certificates. That way, it replicates the investment portfolio managed by the strategy sponsor 1:1. Advantage of the white label solution: The investment manager saves himself the effort of setting up an entire issuing program himself. The white label platform also saves him costs and valuable time from the initial idea to market launch.

The listing at Europe’s largest exchange for Actively Managed Certificates also makes investor onboarding extremely easy: Investors can simply buy the investment product through their broker or bank, including most international online brokers such as Interactive Brokers and swissquote.

By choosing Interactive Brokers as the Execution Venue for international equities, iMaps offers the lowest transaction costs when reallocating within the portfolio. The orders are therefore executed on the main stock exchanges at the lowest available spread and costs. In addition to Interactive Brokers, Baader Bank (and thus a wide range of funds, structured products), Crypto Finance (and thus a wide range of crypto tokens) and ActivTrades (for FOREX and CFD trading) are also included as Execution Venues within the issuance program of iMaps Capital Markets: Which expands the investment universe of available portfolio components that can be allocated into an iMaps Actively Managed Certificates to several million financial instruments. For Actively Managed Certificates, which are offered as private placements or to professional investors, the range of Execution Venues is broader.

If you want to build up and manage assets for your investors, you need flexible and cost-efficient solutions in order to be able to survive in the current market environment, especially as an independent asset manager. The raise of Actively Managed Certificates has only just begun.

If you have any questions about setting up your own Actively Managed Certificate, please do not hesitate to contact us.