Asset Managers To Offer Small Byte-Sized Funds Despite 'Crypto Winter'

ndtv.com:

Asset managers to offer fund tokens despite crypto turmoil

Investors in crypto have endured wild moves in recent months, but this has not fazed asset managers who are preparing to use the blockchain technology behind cryptocurrencies to break funds into bite-sized units, or tokens, to sell to small savers.

Bitcoin fell 7.7 per cent in the space of just a few minutes on one day last week, following a 15 per cent drop on one day in June as aggressive rate hikes by major central banks and ultra-high inflation prompted investors to ditch high-risk assets.

The sector is also facing other issues, with Celsius this week suing a former investment manager for losing or stealing tens of millions of dollars in assets before the crypto lender went bankrupt last month.

However, private markets investment firms Hamilton Lane and Partners Group have tokenised funds in the past year and said they were considering further products.

Mainstream asset manager abrdn hopes to launch a tokenised fund this year, according to a source familiar with the matter, and rival Schroders is also investing in the sector.

In such funds, tokens are issued through a security offering which gives the investor the right to participate.

Blockchain allows the tokens, or fund fractions, to be securely managed, proponents say, and can help small investors to buy illiquid assets like private equity, which tend to offer higher returns but can be hard to trade in and out of quickly.

"Every asset manager who has the ambition to offer private markets to their clients and be a leader in that space will look into blockchain technology," said Magnus Burkl, principal at consultants Oliver Wyman.

Some potential investors are, however, wary of the close link between the technology