Academy
For 30+ years, John Tiner & Partners has created securities and other financial instruments for a diverse global client base, including banks, family offices, asset managers and businesses raising capital. The following educational resources aim to highlight the various use cases for our products and provide additional context about the instruments used.
The global asset management landscape is undergoing a significant shift, with Actively Managed Certificates (AMCs) emerging as a powerful and increasingly popular tool. These innovative financial instruments are reshaping how boutique asset managers operate and compete against larger, more established firms, particularly in Europe.
Investors are constantly seeking new ways to gain exposure to diverse assets, from traditional stocks to emerging cryptocurrencies. Among the myriad of investment tools, tracker certificates have emerged as a versatile and potent instrument. These securities, sometimes referred to as exchange-traded notes (ETNs), are gaining traction for their ability to provide a simple and cost-effective way to track the performance of an underlying asset or portfolio.
Equity-linked notes (ELNs) are a type of structured financial product that offers investors a way to participate in the performance of an underlying stock or equity index while retaining the principal protection of a bond. These notes are a hybrid security, combining the characteristics of a debt instrument with the potential for equity-like returns.
Businesses are constantly seeking innovative ways to manage risk and unlock value. One instrument gaining traction, particularly in the realm of distressed assets, is the recovery note. These debt securities, often a marketing term for specialized bonds, derive their value from an underlying pool of “bad debt” – loans or bonds that have defaulted. For astute investors and businesses looking to optimize their balance sheets, recovery notes offer a unique avenue for potential returns.
Real estate has long been a cornerstone of investment portfolios, but direct ownership can be illiquid, capital-intensive, and administratively complex. Securitization offers a powerful solution, transforming the economic benefits of a physical property into freely transferable securities. This process not only unlocks capital but also provides a flexible and efficient way to manage real estate investments.
Asset management is a very competitive market, especially for small and medium size operators. Even if you have developed a successful investment / trading strategy, marketing this as an investment opportunity to new clients can be tricky. Advertising and client acquisition is one thing, and we are not covering it here, but an important element is making the investment for potential clients as smooth and comfortable as possible. One way of letting your customers comfortably invest into a trading strategy is to offer them to buy into a fund – but that works if you are operating a fund management license and have the full infrastructure required for that. Not all asset managers do. So a different solution, equally comfortable for customers, is to have the trading strategy presented to them in the form of a security – the one they can easily buy through a broker or a bank, by ISIN number.
The primary reason to securitize a portfolio of defaulted obligations is to facilitate their professional management and recovery. A defaulted loan is a non-performing asset; it is not generating interest, and its value is uncertain. A creditor holding such a loan may lack the specialized expertise, resources, or time to pursue recovery efforts, which can involve complex litigation, negotiation, and asset tracing.
By securitizing these bad loans, the original creditor can transfer the risks and burdens of recovery to a special purpose vehicle (SPV). The SPV, in turn, issues securities to investors who are willing to pursue a potentially high return from the successful recovery of the underlying debt. This structure allows for the concentration of a specialized function – debt recovery – under a single management umbrella, often in the hands of professionals like litigation funds, law firms or debt collection agencies.
There are not so many purely crypto-native investment opportunities, but those that exist often excite the interest of investors outside the circle of crypto enthusiasts. To name the main ones:
- Speculative investment into ‘coins’ with the expectation of their market value appreciating. The main and most famous in this category is, of course, Bitcoin.
- Investing into trading strategies, often robotic, on crypto exchanges. The crypto exchange Binance is particularly famous for an abundance of traders offering to try your luck in letting them trade a dedicated account for you or let you into a robotically managed pool.
- Investing into various yield generation strategies under the general rubric of ‘DeFi’ (decentralized finance).
- Venture investments into purely crypto businesses; such businesses would prefer to accept USDT or similar money surrogate as investment rather than regular money.
It is easy investing into all the above if you have USDT (or similar stablecoin) and feel comfortable managing (and safeguarding!) a crypto wallet. Many traditional investors (high net-worth private portfolio owners, family offices, investment funds, broker-managed portfolios etc.) would rather not risk creating their own crypto investment and holding infrastructure (for the fear or hacking risks, but sometimes also for regulatory reasons), but would happily invest through a traditional investment instrument, such as an ETF or a tradable security (with ISIN).