Baillie Gifford has launched a tokenised high yield bond fund with global financial services company BNY.
According to the asset manager, the Baillie Gifford Enhanced Yield fund (BAGEY) is the first publicly available fully native UK-regulated tokenised fund.
The OEIC runs on Ethereum and Solana and tokens are issued directly as the investor’s holding in the fund, with public blockchains used as the legal source of truth for ownership, meaning the fund is native rather than wrapping an existing product or legacy infrastructure.
By using public blockchains as part of the fund’s core architecture, Baillie Gifford says it is extending the standards investors expect from regulated investment funds into infrastructure designed for markets that operate continuously, transparently and programmatically.
BAGEY, is a dollar-denominated, actively managed, short-duration portfolio of public corporate bonds with an average credit quality of BBB, currently offering a yield of approximately 7%.
The fund has daily dealing and will be available to eligible investors in the UK, Switzerland and Cayman Islands, subject to applicable laws, regulations and distribution restrictions. Eligible professional investors can mint and redeem Fund tokens directly using stablecoins or fiat, with a minimum investment of $100.
Baillie BNY will provide tokenisation and wallet infrastructure for the fund, subject to regulatory approval, while NatWest Trustee and Depositary Services will act as the fund’s Depositary.
Theo Golden, head of digital assets and tokenisation at Baillie Gifford, said: “Tokenisation will only matter if it makes finance fundamentally better. A digital wrapper around yesterday’s infrastructure is not enough. Clients do not need novelty for its own sake; they need cleaner ownership, stronger governance, faster settlement and infrastructure they can trust.
“That is what native issuance changes. The Baillie Gifford Enhanced Yield Fund is not a token placed on top of a fund. It is a fund issued onchain, with the blockchain serving as the register of record. Investors hold the fund directly: direct ownership, direct recourse.”
Katey Neate, BNY Global Head of Investor Solutions at BNY, said: “Tokenisation has moved from concept to real-world application, and this launch shows how regulated fund structures can evolve to meet the needs of a more digital, connected marketplace.
“We’re proud to be collaborating with Baillie Gifford on this first for the UK market, which will be a global blueprint for shaping how traditional financial assets can be issued, serviced and accessed through blockchain-enabled infrastructure.”
