We turn your Strategy into a Product

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  Susan Niederhöfer
  Chefredakteurin

Many external asset managers have strong strategies and an established client base, but often lack the infrastructure for scalable investment products. Why is an AMC with GenTwo simpler than classic solutions?

Highly professional managers have a strategy that works, clients who have trusted them for years, and often a name the industry knows. What they lack is never investment skill. It is the wrapper to turn that into a product that can grow with them.

A fund is an excellent vehicle for this once a strategy reaches real scale i.e., above roughly USD 100 million. Below that, an AMC as GenTwo offers it is often the more flexible and cost-effective route. It turns the strategy into a tradable security with an ISIN that sits in the client’s own account, next to their equities and bonds. With GenTwo, it can go live within days. The manager brings along the strategy and the clients. We provide the infrastructure that turns it into a product – quickly and at low cost.

The AMC Summit Report shows that strategies below USD 100 million can save 60-70% of the cost with an AMC compared with a classic fund. How exactly does that saving come about?

Quite simply. An AMC carries a small annual fee on the assets plus modest fixed costs, which rise as the structure is growing more complex. However, prices and conditions vary. That is exactly why we have developed the AMC Creator: a digital comparison tool where you can see the terms of different providers side by side, ours and those of our partners. In a few minutes you can find the range, thus saving cost, time and effort.

The AMC Creator is designed to simplify the search for the right issuance partner. How does it work in practice for an advisor: which information is required, which findings does the tool provide – and how does it support the decision making process?

The typical users of the AMC Creator know that an AMC is the right vehicle, but they do not know who to work with, what a fair price looks like, or which provider best covers the intended strategy or underlyings. After filling in a simple form with questions – on the asset class and the structural basics – they get back a list of suitable providers. In some cases, they can even generate a draft term sheet. The results are easily comparable along a common set of parameters such as issuer domicile, cost, time to market or vehicle structure. Users can also adjust their assumptions and immediately see the effect. Nothing is binding. Instead of weeks of communication with different providers, users get the relevant information right away, can select the contacts they are most interested in, and are better prepared for their first meetings. The goal is more transparency for the best price in the market.

The universe of possible AMC underlyings today ranges from private equity and private debt to crypto, art and wine. Which asset classes are currently most in demand among Swiss wealth managers? And where is the widest gap between discussion and actual investment?

Alongside liquid, systematic strategies on equities and fixed income, equally strong interest comes from private markets. Private equity and private debt are no longer a niche for Swiss managers but a real part of what actually gets built, with real estate increasingly being in the mix. Digital assets and truly exotic underlyings, from art to wine, are smaller but steadily growing parts of the business.

Switzerland remains the starting point of the AMC universe, but international interest is growing. How significant is the move into the US for GenTwo, and what role does the partnership with LUMA Financial play?

You are right. Switzerland is and remains the core market for AMCs, but the product i, without doubt, becoming more international: a certificate structured in Zurich can now be sold in Dubai or Singapore. Cross-border capability is, therefore, one of the most valuable things a platform can offer. The UK is a growing market for us, which is why we have opened an office in London. In terms of our move across the Atlantic, we see great opportunities in the offshore wealth market in the Americas as a whole – both the US and Latin America. That is where Luma comes in: they know the market inside and out. We bring the issuance infrastructure, they bring the connection to distributors. Although we are only at the beginning, we are both confident that we are going in the right direction.

What insights can other markets gain from Switzerland, and what can they learn from it?

The most important lesson is not a regulation or a product but attitude. Switzerland has learned early on to hold two things in balance: giving the instrument room to develop, and subjecting it to real discipline with regard to transparency, governance and suitability. The freedom to turn almost any strategy into a tradable product only works if it is handled responsibly. It took years to get that balance right. It is exactly that combination of openness and diligence that we export, and that other markets can take as a learning example from the Swiss experience.

The Summit Report ends with the line: “The AMC’s most interesting applications may not yet exist.” Which application that doesn’t yet exist excites you most, and where is it more likely to emerge: in Switzerland or internationally?

One particularly forward-looking application that excites me is the hybrid, thematic AMC we presented in our AMC Summit Master Class: a single product, under one ISIN, combining growth from private equity, income from private debt and the liquidity of listed assets, all around one clearly defined theme. Without an AMC, this would only be feasible with considerable effort and at high cost. More broadly, I am fascinated by the idea of AMCs becoming routine, easily accessible building blocks. I also find automated, tokenized strategies exciting, even though they are still in the future. As to where, structural innovation will likely be concentrated where infrastructure and know-how sit – which for now is, above all, Switzerland. At the same time, growing demand from international markets will further drive this development.

If a Swiss wealth manager reads this interview and thinks “this could be interesting for me,” what is the most important first step, and which argument wins them over in the decisive conversation?

The first step is simple: talk to us, without any obligation. obligation. Anyone who would rather start on their own can open the AMC Creator and see in a single session what is possible and on what terms. The convincing argument is equally clear: you already bring the decisive foundation – a strategy that works and the trust of your clients. Instead of setting up a complete fund, a regulated, tradable product with an ISIN is created: fast, efficient and at significantly lower cost. The rest we are happy to discuss in person.

Thank you very much, Mr. Naegeli, for the conversation. 

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For further details refer to

GenTwo
GenTwo AMC Creator
The GenTwo Global AMC Summit Report

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Philippe A. Naegeli
CEO of GenTwo

Philippe A. Naegeli is an experienced entrepreneur and active investor with a career of more than 30 years in investment and merchant banking, management and corporate governance. In 2007 he founded PAN Asset Management. In 2014 he was appointed CEO, Managing Partner and Vice President of the Board of Forstmann & Co. USA. In 2018 he co-founded GenTwo together with Patrick Loepfe, the globally operating Swiss B2B fintech with the mission of making all assets investible. Today, Philippe serves as CEO of GenTwo and Member of the Board at GenTwo, GenTwo Digital, and SAS Security Agent Services AG.