Aberdon, one of the leading asset managers, is considering launching a token fund.
London:
Britain’s Investment Association called on Thursday for governments and regulators to give the green light to token funds using blockchain technology to make it easier for retail investors to purchase illicit assets.
Token funds split their assets under management into tranches, lowering the minimum investment, making them more affordable for smaller investors.
Industry experts say that the use of blockchain technology to support the token fund, which supports cryptocurrencies, can also reduce operating costs.
“With the rapid pace of technological change, the investment management industry, regulators and policymakers must work together to advance innovation without delay,” said Chris Cummings, chief executive of the Investment Association.
The government and the Financial Conduct Authority should establish a framework for operating the token fund, the IA said in a statement.
The IA said regulators should also assess the merit of cryptocurrencies among investment funds with well-diversified portfolios.
Aberdon, one of the leading asset managers, is considering launching a token fund.
“We are looking into the token and currently assessing how the benefits of blockchain technology can be leveraged in the regulated funds space,” an Aberdon spokesperson said in an emailed statement.
“The tokenized solution should provide both retail and sophisticated investors with new ways to access investment products, thanks to lower investment minimums and better liquidity mechanisms through secondary token markets.”
Fund technology firm FundAdminChain is working with the London Stock Exchange and four asset managers on a token fund. FundAdminChain CEO Brian McNulty declined to name the managers.
Investors have been able to purchase tokens in a fund managed by private equity firm Partners Group through Singapore digital securities exchange ADDX since last year. Investors can get by with an outlay of $10,000 instead of a typical minimum of $10,000.
However, the Global Financial Stability Board cautioned that the token still leaves retail investors exposed to any underlying liquid assets, such as commercial assets and private equity, making it difficult to exit quickly when prices drop.