Fund tokenisation has already reached $2 billion in assets under management (AUM) as of late 2024, and Boston Consulting Group is estimating that the AUM of tokenised funds could reach 1% of global mutual funds and exchange-traded funds (ETF) AUM in just seven years, a potential AUM of more than $600 billion by 2030.
In addition, tokenised funds could see potential investment demand of approximately $290 billion, with the prospect of trillions more as traditional financial institutions such as asset managers and wealth managers embrace on-chain money adoption.
This is according to a whitepaper called Tokenised Funds: The Third Revolution in Asset Management Decoded co-developed by Boston Consulting Group (BCG), Aptos Labs and Invesco.
“We see a pattern of growing investor demand in the tokenised funds space,” said David Chan, managing director and partner at BCG. “Over the coming period, we expect that trend to continue, especially when regulated on-chain money such as regulated stablecoin, tokenised deposit, and central bank digital currency (CBDC) projects materialise.”
Institutions could attract new investor pools and innovative fund distribution opportunities through secondary tokenised brokerages and embedded investing could emerge, according to the whiteparer. For example, smart contracts could be used to tailor fund composition, and also create hyper-personalised portfolios.
“On-chain money introduces two important features – programmability and atomic settlement with tokenised assets – which serves as a catalyst for growth in tokenised funds,” said Alexandre Tang, head of institutions, Apac at Aptos Labs. “Once up and running, tokenised funds can offer advantages such as 24/7 secondary transfers and fractionalisation, a lower threshold for investing, and instant collateralisation if regulatory guardrails are put in place.”
“Wealth and asset managers are navigating a changing technological landscape in how funds are distributed,” said Ken Lin, head of Hong Kong and Southeast Asia intermediary business at Invesco. “The establishment of regulatory guidelines and global standards can help create a solid foundation for a frictionless, globally interconnected industry.”
There are already manay initiatives happening in Asia that are spurring innovation in the space, such as the Hong Kong Monetary Authority's (HKMA's) Project Ensemble.
“Fund tokenisation has the potential to transform the asset management industry. Recognising this, markets worldwide, including Asian financial centers like Hong Kong, are accelerating efforts to capture the opportunity. This includes initiatives to actively promote real-world asset tokenisation and develop a digital money ecosystem, such as Project e-HKD+ and Project Ensemble launched by the HKMA,” Chan added.
