Brian Godins
Calastone, the largest global funds network, has released groundbreaking research, revealing that tokenisation – the process of transforming asset ownership into digital tokens on a blockchain – holds the potential to unlock over US$135 billion [1] in cost savings for the asset management industry. The research also identifies that fund processing costs are projected to rise by 32% over the next three years, putting firms under increasing pressure to modernise.
The study, Decoding the Economics of Tokenisation: Transforming Cost Dynamics in Asset Management, is the most comprehensive economic analysis of fund operating costs to date – from front office trade execution, to back office fund accounting and reconciliations. Involving 26 global asset managers – covering the UK, Europe, Asia and the USA – the research explores how tokenisation could eliminate long-standing inefficiencies in fund issuance, administration, and distribution. By leveraging tokenisation, asset managers could cut operational costs by 23% (or 0.13% of AUM), while also accelerating speed to market of new fund launches and improving overall profitability.
Key findings:
- $135bn opportunity: Across major fund types, the asset management industry can expect to save an estimated $135.3bn as a result of tokenisation – an improvement of 30%, according to estimates by asset managers.
- Improved profitability: For the average fund, tokenisation could deliver a total P&L improvement of $3.1m-$7.9m, including increased revenue estimated at $1.4m-$4.2m per fund based on more competitive TERs.
- Accelerated fund launch: It currently takes 12 weeks to launch a new fund. Tokenisation could reduce this timeline by three weeks, giving asset managers a competitive advantage by enabling quicker access to new distribution channels.
- Reduced seed funding requirements: On average, fund launches currently require $50.3 million in seed funding. Tokenisation could reduce this figure by 24% ($12.2 million) easing the financial burden on firms and investors, enabling more agile fund launches.
Tokenisation and the adoption of tokenised, digitally native investment products represent the future of the asset management industry. By embracing this evolution, investment managers can better address the needs of investors, enhance efficiency, and unlock new opportunities for growth.
Calastone’s Digital Investments solution offers the tools and expertise to support asset managers on the path to tokenisation – providing a framework to bring tokenised investment vehicles into production while realising immediate cost optimisations.
Brian Godins, Chief Commercial Officer at Calastone commented: “Tokenisation is already becoming a core pillar of strategy for asset managers, offering a path to greater efficiency, flexibility, and competitiveness. Our research highlights the scale of the opportunity, with tokenisation capable of unlocking over $135 billion in cost savings and streamlining fund issuance, administration, and distribution.
“While adoption will be incremental, the direction of travel is clear – tokenisation represents the next stage in the evolution of investment vehicles, building on the legacy of mutual funds and ETFs. As firms explore its benefits, we expect to see a gradual integration alongside existing structures, enabling asset managers to modernise at their own pace. At Calastone, we are committed to supporting this transformation, equipping asset managers with the tools and expertise to fully harness the value of tokenisation.”