Certificates

Actively Managed Certificates (AMCs) are rather sophisticated financial instruments. Here is a full explanation of how they work:

1. Definition of Actively Managed Certificate (AMC):

An AMC is an investment tool that allows an investor to access active management strategies through a certificate. Essentially, this certificate represents an investment in a portfolio of assets actively managed by a manager. The AMC combines the flexibility of a managed fund with the simplicity and tax efficiency of a tradable certificate.

2. Operation and Transparency:

   – Operation: AMCs are issued by financial institutions and sold to investors. The AMC manager invests in a variety of assets such as stocks, bonds, commodities, or alternative strategies, following the defined investment strategy. Investors purchase certificates that reflect the value of the underlying portfolio.

– Transparency: AMCs are designed to be transparent. Investors can generally view the value of their investment in real-time and receive regular updates on the portfolio composition and performance. However, understanding the specific investment strategy and associated risks may require a certain level of financial knowledge.

3. Features and Relationship with Your Account:

   – AMCs can be customized to suit different risk profiles and investment goals. They can offer diversification across various assets and markets.

   – They are not directly linked to your bank account like a bank deposit, but you must purchase them through a financial intermediary or a trading platform.

4. Availability of Daily Liquidity:

   – The liquidity of an AMC depends on its structure and the policy of the market on which it is traded. Some AMCs can be traded like stocks on an exchange, offering relatively high liquidity, meaning they can be bought and sold easily during market hours.

   – However, some AMCs may be less liquid, especially if they invest in illiquid assets or are structured in a way that makes them not easily tradable on a daily basis.

In summary, AMCs offer investors a way to invest in complex strategies through a relatively simple and tradable vehicle. They are suitable for investors seeking active management of their investment but wishing to avoid the complexity and potentially higher costs of traditional funds.