From ledgerinsights

Invesco has previously issued crypto linked exchange traded funds, but now the asset manager (AUM $1.9 trillion) is making its first steps into tokenization of real world assets (RWA) by partnering Singapore’s DigiFT. The first fund to be tokenized is a senior private credit fund, to meet the strong appetite for alternative investments.

Invesco is the latest in a raft of big name asset managers to embrace fund tokenization, with Franklin Templeton leaning in early and BlackRock’s BUIDL grabbing the headlines.

This is the second major brand landed by DigiFT. Just three months ago, DigiFT was announced as the first distribution partner for uMint, the UBS tokenized money market fund. DigiFT is regulated in Singapore with both a capital markets and a market operator license allowing it to engage in both issuance and operate a secondary marketplace.

While UBS did the tokenization of uMint itself, DigiFT is tokenizing the Invesco fund on the Ethereum and Arbitrum blockchains. The tokens represent shares in a special purpose vehicle (SPV), with investors paying in stablecoins or fiat currency and the SPV investing the equivalent in the underlying fund.

The private credit tokens are for a $6.28 billion senior secured loan strategy fund. They are available to accredited and institutional investors, with an initial investment of $10,000, a much smaller threshold than a conventional private credit fund. If there’s sufficient demand, that figure could fall further.

Many private credit funds offer monthly redemptions, but this is one of the few that offer daily redemptions in Asia.

Faster tokenized fund redemptions with liquidity pools

Henry Zhang, the Founder and CEO of DigiFT shared some of the future plans. Despite offering daily redemptions, there’s usually five day settlement. This is where there’s a mismatch between on-chain expectations and the underlying asset. So Mr Zhang is planning to offer an on-chain liquidity pool (in future). In other words, the token holder could redeem the token in seconds, with the liquidity provider waiting five days.

“They can get a hundred dollars if they can wait five days, if they’re not in a hurry for liquidity. But if they want it in five seconds, they probably see $99.90 as good, or $99.80 as good,” said Mr Zhang.