The firm says there is growing investor appetite for tokenized financial assets. A report last week said that AuM of such funds could hit $600 billion by the end of the decade.

UBS Asset Management has just launched its first tokenized investment fund, part of a growing market trend.

The UBS USD Money Market Investment Fund Token is a money market investment built on Ethereum distributed ledger technology, aka blockchain.

Fund tokenization refers to the use of blockchain-based digital tokens to represent fund ownership, functioning similarly to the way in which transfer agents record fund shares today. In early tokenization use cases, for example, companies used special purpose vehicles (SPVs) to manage assets such as real estate.

Similarly, fund tokenization can be achieved by using existing unit trusts and/or fund company vehicles. 

A white paper from Invesco, Boston Consulting Group and Aptos Labs, issued last week, says that AuM of tokenized funds could hit $600 billion by 2030.

Last year, UBS AM launched a live pilot of a tokenized Variable Capital Company (VCC) fund. UBS is partnering with the Monetary Authority of Singapore’s Project Guardian initiative.

“We have seen growing investor appetite for tokenized financial assets across asset classes,” Thomas Kaegi, co-head of UBS Asset Management APAC, said. 

The latest fund launch is part of the broader expansion of UBS’s tokenization services through UBS Tokenize where in June 2023, the bank originated CNH200 million ($28.04 million) of fully digital structured notes for a third-party issuer.

In November 2023, UBS completed what it said was the world’s first cross-border repurchase transaction with a natively-issued digital bond fully executed and settled on a public blockchain.