Baillie Gifford launches UK’s first ever tokenised fund
Baillie Gifford has launched the UK’s first ever fully tokenised investment fund, in a move that will grant savers the opportunity to invest in short-dated bonds via blockchain-based tokens.
The Scottish investment house unveiled its Enhanced Yield Fund on Tuesday, with a mandate actively to manage investors money in a variety of short-term corporate and government securities.
The fund is the first of its kind to be fully native on the blockchain in the UK, after the financial watchdog revealed fresh guidance for asset managers to launch their own tokenised funds.
The framework, initially laid out by the Financial Conduct Authority last autumn, would help lure more young savers into investment and improve the efficiency of UK-based funds, the watchdog said at its unveiling.
Baillie Gifford’s new fund comes amid a groundswell of interest in so-called tokenisation, whereby financial assets are represented on the blockchain. Supporters argue the technology will help bring down administrative costs of running funds and speed up investing, as trades are cleared instantly.
Baillie Gifford’s is first ‘fully native’ tokenised fund
Several asset managers have launched tokenised funds that wrap existing vehicles into a tokenised form, but Baillie Gifford’s new product marks the first ‘fully native’ fund of its kind to be based and regulated in the UK.
Theo Golden, head of digital assets at Baillie Gifford, said the launch would give investors “infrastructure they can trust”, adding: “Tokenisation will only matter if it makes finance fundamentally better. A digital wrapper around yesterday’s infrastructure is not enough.”
The developments come as part of a wider push from regulators to embrace digital assets, after facing being criticised for falling behind peers in the race to adopt the rapidly growing corner of UK finance. Last year, the FCA lifted its ban on crypto tracker funds as part of its bid to meet the government’s demands for watchdogs to ‘regulate for growth’.
It has also shelved plans to ban cryptocurrency operators borrowing and lending money, while the Bank of England on Monday watered down its plans to regulate so-called stablecoins.
Baillie Gifford said its dollar-denominated fund would use two public blockains – Ethereum and Solana – and offer a yield of approximately seven per cent to investors from the UK, Switzerland and Cayman Islands.
Banking juggernaut BNY will provide much of the infrastructure for the new fund, the company said in a press release. Katie Neate, BNY’s head of investor solutions, said: “Tokenisation has moved from concept to real-world application, and this launch shows how regulated fund structures can evolve to meet the needs of a more digital, connected marketplace.
“We’re proud to be collaborating with Baillie Gifford on this first for the UK market, which will be a global blueprint for shaping how traditional financial assets can be issued, serviced and accessed through blockchain-enabled infrastructure.”
Baillie Gifford’s foray into tokenised fund marks a fresh phase for the 118-year-old investment shop, which has earned a reputation for its big bets on some of fast-growing, quality technology stocks. Under the leadership of legendary stock picker James Anderson, the group became an early backer of Amazon. Through several of its investment trusts, the company is also a major investor in Elon Musk’s SpaceX, Anthropic and the Italian tech giant Bending Spoons.