AMCs (Actively Managed Certificates), structured products with discretionary management of the underlying asset, have become mainstream in recent years. They are based on dynamic approach since they emulate active management of the investment strategy. Therefore, the choices are discretionary (and in some cases even purely automatic) and the asset composition is decided by an Investment Manager or Index Sponsor, who is in charge of managing their investment strategy.
This figure sets out the operating strategy of the index that is replicated by the Certificates. AMCs, although by their legal structure they fall under the classification of structured instruments, are very close to the mutual fund concept due to the active component they possess. As just mentioned, the decision-making power of the "manager" in choosing the financial instruments that compose the index is one of the main aspects that distinguish traditional Certificates from AMCs.
Certificates, in their traditional definition, are derivative instruments that have passive replication and the possibility that one or more options may be added including, for example, partial, total or conditional protection of the invested capital and maturity bonuses upon the occurrence of certain scenarios during the life of the instrument. AMCs make it possible to combine some of the benefits of structured products: reduced costs, favorable taxation, low entry level thresholds, and fast time in issuance, as well as the real possibility of actively managing the strategy and underlying assets. They thus adapt to different market situations and conditions, balancing investments within the product, as it happens in mutual funds.
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