Tokenized Investment Funds

Why Funds Are Perfect for Tokenization

Investment funds are ideal tokenization candidates because they already hold diversified portfolios, have established legal structures, and generate regular income distributions.

Types of Tokenized Funds

Mutual Funds

Traditional mutual funds tokenized for 24/7 trading. NAV updates in real-time, and dividend distributions occur automatically via smart contracts.

Exchange-Traded Funds (ETFs)

Index-tracking ETFs tokenized for blockchain settlement. Minimal arbitrage gaps due to instant settlement and continuous trading.

Hedge Funds

Alternative strategies tokenized for limited partners. Minimum investments drop from $500k to $10k. Lock-up periods enforced through smart contracts.

Real Estate Investment Trusts (REITs)

REIT shares tokenized for fractional ownership and 24/7 trading. Quarterly dividends distributed automatically.

How Tokenized Funds Work

Asset manager registers fund with regulators. SPV holds fund assets. Fund issues tokens representing shares. Each token grants proportional rights to assets and income. Tokens trade 24/7 on blockchain marketplaces with instant settlement.

Advantages Over Traditional Mutual Funds

• Lower minimums: $10-100 per token vs $1,000-25,000
• 24/7 access: Trade any time, not just market close
• Instant settlement: Minutes vs T+2 days
• Transparency: Real-time NAV on blockchain
• Reduced costs: Lower custody and transfer fees
• Global access: Borderless investment without restrictions

Real-World Examples

Franklin Templeton Blockchain Fund: Tokenized money market fund with $900M+ in assets, trading on Polygon.

BlackRock iShares Token: Bitcoin and Ethereum ETF shares issued as tokens, trading 24/7.

Key Takeaways

• Tokenized funds enable fractional ownership with lower minimums
• 24/7 trading and instant settlement improve capital efficiency
• Smart contracts automate distributions and reduce costs
• Major institutions actively launching tokenized fund products
• Regulatory frameworks supporting fund tokenization are strengthening globally