Amicorp eyes AMC growth in HK, VCC funds drive momentum

Rising interest in actively managed certificates among asset managers in Asia and the benefits of variable capital companies funds have triggered new activity in Singapore.

Actively managed certificates (AMCs) have been gaining industry traction in Asia, including Amicorp Group which saw a strong demand among Hong Kong and Singapore-based asset managers this year.

Having started offering AMC structures globally since 2020 to the European and Latin American markets, the firm has grown its business focus in Asia since the beginning of this year given higher demand, according to Remko van Ekelen (pictured), CEO of Amicorp Financial Markets Services, a business unit of Amicorp Group.

“In Asia, we have predominantly seen credit strategies as well as pooling of receivables via our securitisation setups,” van Ekelen told SRP. “However, with the external asset managers diaspora becoming more aware of our pooling solutions, the demand for AMC structures has increased, and as a result, we see asset managers set up AMC structures for crypto, equity strategies and structured products."

“We've also seen a lot of investors using market movements to invest in autocall strategies which are also an excellent underlying for an AMC looking for an interest driven strategy," he said.

Amicorp works with Luxembourg-based AMC issuers using standalone orphan securitisation structures that do not go through investment banks. These independent AMC issuers can also issue credit-linked notes (CLNs) and asset-backed security on the firm's platform, according to van Ekelen.

Amicorp acts as the administration and calculation agent and provides issuer services, including external asset managers (EAMs) who value non-bank issuers.

For its EAM clients, the AMC structures make settlement and trading much simpler and less time-consuming, while the larger pool of available assets also prompts “greater diversification" for investors, van Ekelen said.

Looking at this year's trends, many clients are seeking to invest in credit as a strategy, as well as hedge funds and alternative assets such as real estate and art.

The broader Al overarching theme in the market has also pushed stronger demand for algo- traders looking to set up investment products, he noted, adding that the firm also launched products that rely fully on computerised trading strategies in both equities as well as commodities.

VCC funds

Besides AMC offerings, variable capital companies (VCC) funds are among the investments capturing Asian investors’ interests.

The fund wrapper was first constituted under Singapore's VCC Act in January 2020 and has been gaining traction among asset managers and the structured product industry. It works as a corporate entity for investment funds that can freely redeem shares and pay dividends using its net assets or capital with options to be a single standalone fund or an umbrella fund.

Amicorp was granted a capital markets services license in Singapore in 2020 and then in Mauritius last year that allows the firm to set up VCC funds.

Use cases of the fund structure have ranged from family offices using the umbrella structure to segregate assets according to beneficiaries as part of their wealth management plans to private equity and venture capitalist firms creating sub-funds under the parent entity to provide open- ended and closed-ended mandates as part of diverging investment strategies and meeting different levels of risk appetite, according to van Ekelen.

Fund managers also use the VCC structure to segregate real estate assets across different investment areas such as commercial, industrial, agricultural and residential. “In our experience, VCC funds tend to be used for larger transactions and more illiquid investment strategies than for actively managed certificates, which typically are more focused on liquid assets,” said van Ekelen.

The executive believes that both Singapore and Mauritius provide propositions for asset holding and structuring purposes and benefit from a wide array of tax treaties that can open the door to efficiency savings.

The firm is hoping to target more AMC issuance for its Hong Kong-based clients, while Singapore will be VCC funds-driven.

Outlook

“The integration of smart contracts could revolutionise settlement processes, making them faster, more transparent, and could also reduce counterparty risk,” he said.

“By leveraging these innovations, we would expect to drive operational efficiency, cutting down on manual tasks and human errors. Automation and digitalisation would hopefully not only improve speed to market but also lower the cost for issuers and investors," he added.

The firm also expects stronger performances across emerging markets over the coming years as investment sentiments tip further towards the development in the emerging markets.

“As a group, our business focus is predominantly on emerging market investment flows as well as alternative assets, and we expect to see more and more funds being launched that will support that development of emerging markets going forward,” he concluded.

This article was first published by Structured Retail Products (SRP) here.

If you would like to find out more about Amicorp’s AMC or VCC fund solutions, or about any of our other financial market services, please contact the team here