A global fund study has found that tokenisation could reduce operational costs by 23 per cent and eliminate inefficiencies in fund issuance, administration and distribution based on surveys with 26 asset managers across the UK, Europe, Asia and the US.
Most notably, the data company estimated that tokenisation holds the potential to unlock over US$135 billion ($213 billion) in cost savings for the asset management industry at large.
“Tokenisation is already becoming a core pillar of strategy for asset managers, offering a path to greater efficiency, flexibility and competitiveness,” said Brian Godins, Calastone’s chief commercial officer (COO).
“Our research highlights the scale of the opportunity, with tokenisation capable of unlocking over US$135 billion in cost savings and streamlining fund issuance, administration and distribution.”
Calastone highlighted that tokenisation can accelerate fund launches by three weeks, reducing the typical 12-week timeline and giving asset managers a competitive edge in accessing new distribution channels more quickly.
“At present, it takes 12 weeks on average to launch a new fund and consumes US$50.3 million in seed funding. Those figures inflate to 14 weeks and US$63.5 million when the fund is operating cross border, reflecting the additional work required to work across multiple regulatory systems and set up the necessary infrastructure in different countries,” Calastone said.
“With tokenisation, the time to launch a fund shrinks to nine weeks or eight weeks for those with more than US$10 billion AUM (a 28–31 per cent reduction). The cost comes down to US$38.1 million or $38.6 million for larger funds (23–24 per cent reduction).”
Not only could tokenisation speed up fund launches, but it could also simplify distribution and reduce management costs, eliminating the “operational inertia” that causes lost time, higher costs and errors, Calastone said.
With these benefits in mind, Godins expects tokenisation and the adoption of tokenised, digitally native investment products to represent the future of the asset management industry.
“While adoption will be incremental, the direction of travel is clear – tokenisation represents the next stage in the evolution of investment vehicles, building on the legacy of mutual funds and ETFs. As firms explore its benefits, we expect to see a gradual integration alongside existing structures, enabling asset managers to modernise at their own pace,” the COO said.
Earlier this year, local digital asset manager JellyC announced a partnership that would enable the tokenisation of its suite of funds, providing investors with “unprecedented access to liquidity, transparency and compliance”.
In collaboration with liquidity solutions provider Liquidise and the “world’s first formally verified blockchain” Redbelly Network, the asset manager said its aim is to deliver a fully liquid and compliant tokenised fund.
A report published late last year by the Digital Economy Council of Australia, the Digital Finance Cooperative Research Centre and Ripple also found that tokenisation of real-world assets could revolutionise Australia’s financial markets, offering $12 billion annually in efficiencies.
