Alternative investment funds (AIFs) and actively managed certificates (AMCs) are two investment vehicles that have gained popularity in recent years, particularly among sophisticated investors seeking to diversify their portfolios. While both options offer potential for higher returns compared to traditional investments, they differ in various aspects under English law. This article aims to provide a comprehensive comparison of AIFs and AMCs, discussing their legal structure, regulatory framework, and key features.

Legal Structure
1.1. Alternative Investment Funds

An AIF is a collective investment vehicle that pools the capital of multiple investors to invest in various types of assets, such as private equity, hedge funds, real estate, and commodities. Under English law, AIFs can be structured as limited partnerships, investment trusts, or open-ended investment companies (OEICs).

1.2. Actively Managed Certificates

An AMC is a debt security issued by a financial institution that represents a portfolio of assets actively managed by an investment manager. The certificate’s value is tied to the underlying assets’ performance. Unlike AIFs, AMCs are not structured as separate legal entities but rather as contractual agreements between the issuer, investment manager, and certificate holders.

Regulatory Framework
2.1. Alternative Investment Funds

AIFs in the UK are regulated by the Financial Conduct Authority (FCA) under the Alternative Investment Fund Managers Directive (AIFMD) and the Collective Investment Schemes (CIS) Sourcebook. AIF managers (AIFMs) must obtain authorisation from the FCA and comply with strict reporting, risk management, and investor protection requirements.

2.2. Actively Managed Certificates

AMCs are regulated as debt securities under English law, and their issuers must comply with the FCA’s Prospectus Rules, Disclosure Guidance, and Transparency Rules (DTR). Unlike AIFs, AMCs are not subject to the AIFMD or CIS regulations. However, the investment manager responsible for the certificate’s underlying assets must be authorised by the FCA and adhere to applicable rules and guidelines.

Key Features
3.1. Flexibility and Diversification

AIFs offer a broad range of investment strategies and asset classes, providing investors with considerable flexibility and diversification opportunities. AMCs, on the other hand, typically focus on a specific investment strategy or theme, which may limit diversification potential.

3.2. Liquidity

AIFs often have limited liquidity due to their investment in illiquid assets and lock-up periods. Conversely, AMCs are usually more liquid, as they are listed and traded on a stock exchange, allowing investors to buy and sell certificates with relative ease.

3.3. Fees and Expenses

AIFs tend to have higher fees and expenses due to their complex investment strategies and regulatory requirements. AMCs, by comparison, generally have lower fees since they are not subject to the same regulatory burden as AIFs.

3.4. Transparency

AIFs are subject to extensive reporting and disclosure requirements under the AIFMD, ensuring a high level of transparency for investors. AMCs, while not subject to the same level of regulation, are still required to comply with the FCA’s Prospectus Rules and DTR, providing investors with essential information on the certificate and its underlying assets.


Both alternative investment funds and actively managed certificates offer unique benefits and risks for investors seeking to diversify their portfolios. While AIFs provide access to a broad range of investment strategies and asset classes, they come with higher fees, limited liquidity, and more stringent regulatory requirements. On the other hand, AMCs offer greater liquidity, lower fees, and a more straightforward regulatory framework.