Chartered Investment marks 10 years of AMCs as model evolves beyond bank issuance

The AMC market is entering a new phase as providers look to combine the flexibility of securitised investment structures with the trading infrastructure and operational efficiency traditionally associated with banks.

AMCs have established themselves as a useful middle ground between structured products and traditional investment funds - Daniel Maier, CEO

Chartered Investment is positioning itself at the centre of that shift as it marks the 10th anniversary of its first actively managed certificate (AMC), having launched the first in 2016 after establishing the business in 2013.

The company has recently expanded its connectivity with Saxo, which now supports AMC strategies through Chartered Investment's digital platform. Saxo acts as broker while Chartered Investment provides the structuring, regulatory infrastructure and operational processes required for issuance and lifecycle management.

Chartered Investment also has more than a decade of history with Interactive Brokers, with the partnership approaching €1 billion (US$1.2 billion) in assets.

Against this backdrop, SRP caught up with Daniel Maier (pictured), co-founder and CEO of Chartered Investment, to discuss how the AMC market has changed, the company's two-track proposition and where the structure is heading next.

From niche to mainstream

“When we started, SPV-based AMCs were still relatively new and there was a lot of education required around what the structure could actually do,” said Maier.

Over the past decade, the market has matured considerably with AMCs establishing themselves as a middle ground between structured products and traditional investment funds.

“AMCs have established themselves as a useful middle ground between structured products and traditional investment funds, particularly for investors looking for a fund-like investment strategy without necessarily using a fund structure,” he said.

The model nevertheless comes with its own challenges. Unlike a fund, an AMC does not benefit from the same legislative framework, meaning much of the governance and investor protection framework needs to be established contractually.

“At the same time, clients increasingly expect the operational efficiency they would get from a bank-issued structured product,” said Maier.

That has influenced Chartered Investment's approach to the market, with the company investing in the infrastructure, processes and controls needed to support the structure while retaining its flexibility.

Two propositions

Chartered Investment has developed two distinct propositions: Flow AMC and AMC Solution.

Flow AMC is aimed at standardised and liquid strategies where speed, efficiency and competitive pricing are key considerations. Rather than positioning the proposition purely as competition for banks, Maier said Chartered Investment wants to offer an SPV-based alternative to bank-issued products.

“We want to offer an SPV-based alternative to bank-issued products,” he said.

Continuous pricing and efficient trading integrations are therefore central to the model.

AMC Solution, meanwhile, is designed for more complex mandates requiring greater flexibility, including multiple series, OTC derivatives or structured elements.

“Those strategies require more operational support and lifecycle management,” said Maier.

The two propositions are not necessarily mutually exclusive over the lifetime of a strategy.

“Clients do not necessarily have to make one decision and stay there forever,” he said. “We want to provide a factory that can support a strategy as it evolves, including moving from an AMC into a fund structure where that eventually becomes more appropriate.”

Trading infrastructure

The development of the trading infrastructure has become increasingly important to the Flow AMC proposition.

Chartered Investment has more than a decade of history with Interactive Brokers and is approaching €1 billion in assets through the relationship, according to Maier. The relationship provides access to enhanced API capabilities and greater operational visibility, including cash movements.

Saxo provides another trading capability. Its platform currently offers access to AMCs through Chartered Investment, with Saxo providing brokerage and Chartered Investment handling the structuring and operational infrastructure.

“These relationships effectively allow us to use selected trading partners in a way that provides some of the efficiency you would associate with a bank issuer, while retaining the segregation and structure of an SPV-based AMC,” said Maier.

The key element, he said, is standardisation.

“If you try to make the same infrastructure accommodate every possible custody arrangement, underlying and operational scenario, you lose efficiency,” he said. “That is why the more complex cases remain within AMC Solution.”

New competition

The competitive landscape is becoming more diverse, with Chartered Investment facing competition from other SPV-based providers, banks with their own AMC businesses and technology companies offering infrastructure to the market.

Banks retain an advantage in liquid markets because of their balance sheets and trading capabilities. An SPV-based AMC, however, can appeal to investors seeking to reduce bank credit exposure or looking for a structure closer to asset management.

Maier also sees potential competition from neo-brokers and platforms that allow investors to access strategies more directly.

“Our response is to remain wrapper-agnostic and focus on the whole lifecycle rather than selling one particular structure,” he said.

The relationship between banks and SPV-based providers is therefore unlikely to become purely competitive.

“If the investor wants bank credit exposure and the efficiency that they can provide, a bank-issued AMC can be the right solution,” said Maier. “If they want to avoid that exposure, an SPV-based structure has advantages.”

There are also areas where collaboration can make sense, he added, such as using a bank's strengths in areas including FX trading.

“I do not think the market will simply converge into one model,” said Maier. “There will be collaboration where it makes sense, competition where it does not and ultimately the investor's requirements will determine the structure.”

AI enters AMC lifecycle

Technology has been central to Chartered Investment's development, with the company building tools covering areas including rebalancing, fact-sheet production, invoicing, product creation and ISIN allocation.

The next stage is the application of artificial intelligence (AI) across the product lifecycle.

“We think about it across three areas: create, manage and distribute,” said Maier.

On the creation side, AI can improve the speed and accuracy of product setup and documentation. In management, it can help identify data anomalies or potential NAV issues earlier, while distribution applications include sales collateral, flow analysis and more relevant information for partners.

“The important thing is that AI should solve operational problems,” he said. “It is not about adding AI for the sake of it.”

Governance remains critical

The evolution of the AMC market has also brought greater scrutiny of governance and transparency.

“There is still work to do,” said Maier. “My philosophy is to embrace the regulator. Basic things such as audits and proper bookkeeping should not be controversial.”

Chartered Investment's SPVs have been audited for more than a decade, he said, with the company investing in controls and governance.

“There are very cheap ways of establishing an AMC, but if you remove the controls and governance, you create operational opacity and potentially much greater risks for investors,” he said.

The contractual nature of an AMC does not prevent providers from building safeguards into the structure.

“You can build audits, bookkeeping, transparency and risk oversight into the structure,” said Maier. “It comes down to design, accountability and investment in the infrastructure.”

The next decade

Looking ahead, Chartered Investment sees opportunities both geographically and through the continued development of its two AMC propositions.

The company has a European base and is active in Singapore, while Maier points to potential opportunities in markets including South America and South Africa.

The broader fund-light proposition, he said, is not limited to Europe. At the same time, Chartered Investment wants to offer an SPV-based alternative to bank-issued liquid AMCs while continuing to develop its more complex mandates.

“Flow AMC is about speed, scale and efficiency. AMC Solution is about flexibility and sophisticated mandates,” said Maier.

Ultimately, the company's objective is to build infrastructure that allows clients to start quickly, scale their strategies and adapt as their requirements change.

“That is what we have been building for the last 10 years and what we see as the opportunity for the next 10,” he concluded.

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