Tokenized Funds
At S&P Global Ratings, we bridge traditional finance and digital assets including tokenized funds.
What is Tokenization?
Tokenized fund structures combine traditional finance and digital assets.
Tokenization is the representation of an asset - in this context, a financial security - on a blockchain. Tokenization is gaining momentum as a potentially transformative technology in the financial sector.
In traditional transactions, the asset moves on a completely separate system. Multiple intermediaries must reconcile records to verify that the transfer and payment have occured and finalize settlement of the transaction
In fund tokenization, the underlying assets of the fund (stocks, bonds, cash equivalents, etc.) remain the same. What changes is how investor ownership is recorded and managed — replacing traditional ledgers with blockchain-based records.
Benefits of Tokenization
24/7/365 trading and settlement
Efficient collateral management
Transparency
Fractional ownership
Blockchain rails enable global, cross-border transactions
Reduced intermediaries
Programmable in smart contracts
Asset and cross-system compatibility and integration
Methodologies Applied by Global Fund Ratings
Applicable to Tokenized Funds
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Principal Stability Fund Rating (PSFR)
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Fund Credit Quality Rating and Volatility Ratings (FCQR/FVR)
Principal Stability Fund Rating (PSFR)
Fund sponsors may use S&P Global Fund Ratings to communicate a third party's independent opinion about their funds' principal stability, credit quality or volatility to potential and current investors. Fund investors may use S&P Global Fund Ratings to obtain third-party insight and an independent opinion of some of the credit risks associated with their investments. Corporate treasurers, bank trust departments, insurance companies, municipalities, state and local governments, and other institutional investors may use Fund Ratings to support their analytics and business related initiatives.
Fund Credit Quality Rating and Volatility Ratings (FCQR/FVR)
S&P Global Ratings assigns Fund Credit Quality and Volatility Ratings to fixed-income funds with fluctuating net asset values, including bond funds, cash-enhanced funds, ETFs, fixed-income hedge funds, Local Government Investment Pools (LGIPs), unit investment trusts, and preferred share trusts.
By the Numbers
*across S&P Global Ratings
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¹ References sourced from internal research conducted on global top 20 asset manager websites, fund prospectuses, fund annual reports and/or other related public documents & sourced from IPE data as of 2023. Other data points sourced from internal data from S&P Global Ratings in 2022.