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Arman Salavitabar, CFA

Arman Salavitabar, CFA

Founding Partner, FundFront

Knowledge

How to Structure Actively Managed Certificates (AMC) for Hedge Fund Strategies

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Introduction

Establishing a structured Actively Managed Certificate (AMC) programme can significantly enhance a hedge fund’s ability to offer flexible and dynamic investment solutions. AMCs provide a vehicle for actively managing a portfolio of assets, offering investors transparency and liquidity. FundFront specializes in supporting hedge funds by offering a comprehensive, full-service AMC programme that streamlines the issuance process. By leveraging top-tier service providers on a single platform and incorporating a bankruptcy remote Special Purpose Vehicle (SPV), FundFront enables hedge funds to focus on their core competencies while we manage the intricate operational details.

The Importance of a Structured AMC Programme

Enhanced Investor Transparency

One of the key benefits of AMCs is the high level of transparency they offer to investors. AMCs provide regular updates on the underlying assets and the performance of the investment strategy. This transparency builds investor confidence and can lead to increased investment inflows.

Improved Liquidity

AMCs typically offer better liquidity compared to traditional investment vehicles. This is particularly attractive to investors who seek the ability to enter and exit positions more readily. Enhanced liquidity can also make the AMC more appealing to a broader range of investors, including those with shorter investment horizons.

Bankruptcy Remote SPV

A bankruptcy remote SPV is crucial in protecting the assets within an AMC programme from the credit risks of the parent hedge fund. This structure ensures that the assets are insulated from the potential insolvency of the fund, providing additional security and stability to investors. By using a bankruptcy remote SPV, FundFront enhances the attractiveness of AMCs to risk-averse investors, thus broadening the potential investor base.

FundFront’s Comprehensive AMC Programme Solution

Full-Service Coordination

At FundFront, we offer a full-service AMC programme designed to streamline the entire issuance process. From the outset, we coordinate all aspects of the programme, integrating top-tier service providers on a single platform. This cohesive approach ensures that every component, from legal documentation to distribution, is managed efficiently and effectively.

Integration of Top-Tier Service Providers

Our extensive network includes leading service providers such as legal advisors, trustees, and paying agents. By integrating these services into a unified platform, FundFront eliminates the need for hedge funds to manage multiple vendors. This not only simplifies the process but also ensures consistency and high standards across all aspects of the AMC programme.

Operational Management

Managing the operational details of an AMC programme can be daunting. FundFront takes on this burden, allowing hedge funds to focus on their core business activities. Our team of experts handles everything from compliance and regulatory requirements to documentation and transaction execution, ensuring a seamless and hassle-free experience for our clients.

Key Components of FundFront’s AMC Programme

Legal and Regulatory Compliance

Navigating the legal and regulatory landscape is a critical aspect of any AMC programme. FundFront ensures that all legal and regulatory requirements are meticulously adhered to. Our legal partners are experts in the field, providing comprehensive support in drafting and reviewing all necessary documentation.

Trustee and Paying Agent Services

Trustees and paying agents play a vital role in the administration of AMCs. FundFront partners with leading trustees and paying agents to ensure the smooth operation of your AMC programme. These partners handle the distribution of interest payments, manage redemptions, and ensure compliance with the terms of the certificates.

Distribution through Custody Accounts

As bankable securities, AMCs issued through FundFront’s programme can be distributed through custody accounts. This facilitates a wider reach and ensures that the certificates are accessible to a broad range of investors. By enabling distribution through established custody accounts, FundFront ensures that the certificates are seamlessly integrated into the financial system, enhancing their appeal and marketability.

Benefits of Partnering with FundFront

Expertise and Experience

FundFront’s team comprises seasoned professionals with extensive experience in structuring and managing AMC programmes. Our expertise ensures that your programme is designed and executed to the highest standards, maximizing its potential for success.

Customized Solutions

We understand that every hedge fund has unique needs and objectives. FundFront offers customized solutions tailored to meet the specific requirements of your hedge fund. Our flexible approach ensures that your AMC programme aligns with your strategic goals and operational capabilities.

Streamlined Process

By managing all aspects of the AMC programme, FundFront provides a streamlined and efficient process. This reduces the administrative burden on your hedge fund, allowing you to concentrate on your core competencies and strategic initiatives.

Integration with Front-End Marketing Platforms

FundFront offers integration with front-end marketing platforms, enabling hedge funds to effectively promote their AMCs. If a hedge fund has a substantial portfolio of products, we also provide marketplace software solutions that allow for better product visibility and investor engagement. This integration helps hedge funds reach a broader audience and streamline their marketing efforts.

Increased Market Credibility

Partnering with FundFront enhances your hedge fund’s credibility in the capital markets. Our comprehensive approach and integration of top-tier service providers ensure that your AMC programme meets the highest standards, bolstering your firm’s reputation among investors and market participants.

Conclusion

Establishing a structured Actively Managed Certificate (AMC) programme is a strategic move for hedge funds looking to enhance their capital market access, offer flexible investment solutions, and improve transparency and liquidity. FundFront offers a comprehensive, full-service AMC programme solution that streamlines the issuance process, integrates top-tier service providers, incorporates a bankruptcy remote SPV for added security, and manages all operational details. By partnering with FundFront, hedge funds can focus on their core competencies while leveraging our expertise and resources to successfully manage the complexities of the AMC market.

For hedge funds ready to take the next step in their growth journey, FundFront stands ready to provide bespoke solutions that meet your unique needs. Contact us today to learn how we can help you establish a structured AMC programme and achieve your strategic financial objectives.

Written by:

Arman Salavitabar

Arman Salavitabar

Founding Partner, FundFront

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