JP Morgan and Apollo unveil tokenisation project to expand access to private assets
This proof of concept, developed in collaboration with WisdomTree, is one of several industry pilots that are taking place under Project Guardian.
The firms aim to demonstrate through an early-stage proof of concept how wealth advisors could seamlessly and automatically manage discretionary portfolios at scale, and include private assets in these portfolios, by using smart contracts and fund tokenisation.
Alternative investment funds, such as private equity, real estate, private credit and infrastructure, are not commonly included in discretionary portfolios due to operational processing requirements and liquidity constraints.
Deep Dive: Tokenisation represents 'paradigm shift' for asset management
However, the asset managers have estimated that the tokenisation of these investments would enable these products to more easily be offered to wealthy individuals, representing a $400bn annual revenue opportunity for alternative fund managers and distributors.
«In its final form, we see wealth managers being able to include alternative investments in model portfolios, providing investors with better access to portfolio enhancing investments,» said Tyrone Lobban, head of blockchain and Onyx Digital Assets at JP Morgan.
This would not be through sweeping changes to regulations or removal of investor protections, he said, but via «streamlined, automated processing and settlement of trades in an asset-class agnostic manner».
To date, alternatives managers have focused on expanding individual access through the development of semi-liquid product structures, which typically offer periodic liquidity that gives investors more flexibility.
Calastone: Tokenisation will revolutionise the 100-year-old fund structure
However, the
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