The Evolution of AMCs: From Swiss Innovation to Global Financial Tool

This article is part of The Assetizer, GenTwo's thought leadership platform.

I'm moderating a panel discussion tonight in our Zurich office called "AMCs in Focus" with experts from Swissquote and our CEO Philippe A. Naegeli. While preparing, I've been diving into the fascinating history of Actively Managed Certificates – a financial innovation that has quietly grown into a trillion-dollar market.

We've covered AMCs in previous newsletters – from art investment to uranium portfolios – but never explored their origins. So with tonight's panel as inspiration, let's look at how they evolved from a niche Swiss product to a global financial tool.

Swiss Origins

AMCs emerged in the mid-2000s in Switzerland as an extension of the structured products market. While traditional structured notes were static instruments, AMCs introduced something revolutionary: dynamic management within a note format.

The early versions were relatively simple. Swiss banks like Julius Baer and Vontobel began issuing these certificates primarily for private banking clients who wanted bespoke, actively managed strategies without the complexity and cost of setting up dedicated funds.

Their immediate appeal was speed and simplicity. An AMC could be launched in weeks rather than months, with lower costs than comparable fund structures. However, these first-generation AMCs had limitations – they were primarily bank-issued, with trading often restricted to the issuing institution, and focused mostly on liquid assets.

From Niche to Mainstream

The period from 2015 to 2020 marked a significant transformation. What had been a specialized Swiss offering began gaining wider acceptance, driven by regulatory clarity and growing demand from asset managers looking for faster alternatives to traditional funds.

By the late 2010s, growth was booming. (I have come across annual growth rate estimates of 20-30% in AMC issuance volume, though that is something I’d like to look into in more detail). What is sure is that the market has clearly been shifting from experimental to established.

Technology Transforms the Landscape

Perhaps the most significant development in AMC evolution has been technology's impact. As we detailed in our book "Assetization," technological innovation has dramatically transformed how AMCs are created and managed through specialized platforms that digitize the entire lifecycle.

These technological advancements have:

• Reduced operational costs and errors
• Improved execution speed
• Enhanced compliance monitoring
• Enabled near real-time pricing

GenTwo has been at the forefront of this innovation, building an AMC infrastructure that leverages modern technology to streamline processes that were previously manual and time-consuming. This technological transformation has lowered barriers to entry and expanded the universe of potential AMC issuers beyond just large banks.

The Off-Balance Sheet Revolution

A major structural innovation has been the rise of off-balance sheet models. While traditional AMCs were issued directly by banks (carrying the bank's credit risk), newer models use special purpose vehicles (SPVs) to issue certificates.

This offers several advantages:

• Elimination of issuer credit risk
• Ability to include a wider range of assets
• Greater flexibility in structuring
• Improved capital efficiency

This approach has also been at the heart of what we are doing at GenTwo – it was one of the key innovations we really focused on. (Hence our name, coming from the idea of "second-generation" structured products.) These structures have particularly resonated with asset managers seeking to include alternative assets and digital asset specialists.

The Future of AMCs: Just Getting Started

By 2025, AMCs have evolved from a Swiss curiosity to a global financial tool managing over USD 1 trillion in assets. The issuer landscape has diversified dramatically, with participants ranging from major global banks to specialized fintech platforms.

The underlying assets have expanded far beyond traditional equities and bonds to include private equity, real estate, cryptocurrencies, art, and virtually any asset class imaginable.

This remarkable growth reflects how AMCs have addressed fundamental market needs:

• Faster time to market compared to traditional funds
• Lower setup and running costs
• Greater flexibility in investment strategy
• Ability to package almost any asset or strategy

And yet, we're still in the early chapters of the AMC story. With continued technological innovation, evolving regulatory frameworks, and growing market adoption, these versatile financial containers stand poised to further transform how investment strategies are packaged and delivered.

I look forward to exploring this fascinating financial innovation in more depth in future editions of The Assetizer. As always, I'd love to hear your thoughts and experiences with AMCs in the comments below.

Best,

Tom Lyons, Head of Communications and Content, GenTwo