UK asset manager Baillie Gifford, with $237bn in AUM, has unveiled its first publicly available tokenized fund, $BAGEY, the Baillie Gifford Enhanced Yield Fund. It is an actively managed short duration corporate bond fund. The issuance is on the Ethereum and Solana blockchains, and the asset manager says it is only willing to do a native issuance, rather than a wrapper that tokenizes an existing fund.
Depending on the structure, it is entirely possible for a wrapper token to be out of sync with the underlying asset. For example, if the token trades 24/7 but the ownership of the underlying asset is only updated during transfer agent opening hours. Worse still, the asset could be wrapped into an offshore fund and then tokenized. That said, there are workarounds, but they require significant effort.
With a digitally native issuance, when the token moves, the ownership moves with it. The blockchain represents the official book of records. In a blog post, head of digital assets and tokenization Theo Golden outlined the company’s simple test. “Does tokenisation improve the outcome for the client without weakening the proposition? If it doesn’t, we don’t do it.”
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