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Tokenisation of alternative investments

Outlooks & Research

BNP Paribas Asset Management
 

Technology offers fascinating perspectives for the asset management industry. These include tokenisation, the process of creating a digital representation of non-digital assets on a blockchain.

Co-authored by specialists from our digital transformation and private debt and real assets teams along with the Chartered Alternative Investment Analyst Association (CAIA) and Hong Kong-based tokenisation platform Liquefy, this new research paper explores the application of tokenisation in enabling investors to gain fractional ownership of alternative asset classes.

Tokenisation could contribute to addressing some of the inherent challenges – for both investors and asset managers – of the alternative asset classes by:

  • Improving liquidity – the tokens could be traded on secondary markets, improving liquidity.
  • Enabling faster, cheaper transactions – less complexity and greater operational efficiency can reduce transaction and lifetime costs enabling faster, cheaper transactions.
  • Offering greater transparency – the token holder’s rights, legal responsibilities and record of ownership could be embedded into tokens, offering greater transparency.
  • Broadening access – tokens would provide access for more investors to previously unaffordable or insufficiently divisible asset classes.

Tokenisation of Alternative Investments is our contribution to the debate about the potential future applications of digital technologies in asset management.

Read the paper 

Tokenisation of alternative investments

Watch the video with author Emmanuelle Pecenicic on Tokenisation of Alternative Investments

Any views expressed here are those of the author as of the date of publication, are based on available information, and are subject to change without notice. Individual portfolio management teams may hold different views and may take different investment decisions for different clients. This document does not constitute investment advice.

The value of investments and the income they generate may go down as well as up and it is possible that investors will not recover their initial outlay. Past performance is no guarantee for future returns.

Investing in emerging markets, or specialised or restricted sectors is likely to be subject to a higher-than-average volatility due to a high degree of concentration, greater uncertainty because less information is available, there is less liquidity or due to greater sensitivity to changes in market conditions (social, political and economic conditions).

Some emerging markets offer less security than the majority of international developed markets. For this reason, services for portfolio transactions, liquidation and conservation on behalf of funds invested in emerging markets may carry greater risk.

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