In a previous piece, I introduced the concept of the “wealth store”, or the idea that the rails in the chain can reduce the entry barriers and radically climb the operations for financial advisors and wealth administrators. Like Shopify, it allowed anyone to launch an online retail business, Crypto is allowing a new generation of investment professionals to start and climb advice companies without the inherited layers of tradfi infrastructure.
This democratization of tips has broader changes in asset management. Because when he moves away, beyond the advisor and beyond assets, he begins to see something else: a transformation in investment strategies itself, as well as in the machinery behind them.
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Tokenization will remodel all assets classes
Beyond the Council, cryptographic and tokenization are ready to redesign full asset classes by making assets worldwide, fractionated, fractional, compounds and negotiable 24 hours a day, 7 days a week. Consider Stablecoins, which in 2024 facilitated $ 27.6 billion in chain transfers, exceeding the combined volume of visa and mastercard. Efficiency is clear: transactions are established instantly throughout the world, with a much lower friction and inactivity time. Even traditionally stagnant products, such as money market funds, go in the chain. Traditional monetary market funds charge around 10 to 25 basic points in rates, while cryptographic can cut those costs substantially. Estimates of the study of the Boston Consulting Group could add around 17 basic annual performance points (or approximately $ 100 billion per year worldwide) eliminating operational inefficiencies. In summary, tokenization is making markets always open and hyperefficients, unlocking assets for a global investor base.
Of the transparency of assets to the transparency of the strategy
It is now a consensus vision that tokenization also brings greater transparency of assets. Reservations and transactions in the chain are often auditable in real time. However, active investment strategies and managers remain a black box. We can monitor the tokenized assets in the chain, but the logic of how the portfolios is administered is still opaque when the strategies reside outside the chain. While anyone can inspect the owners of a defi loan contract, one still cannot look at the flows, assignments and economy of a coverage fund in the same way. The next border is contributing the same transparency and composition to the strategies and their own managers, not only the underlying assets.
Coverage funds today: large, exclusive and opaque
Coverage funds are private capital groups that use complex trade and risk management techniques to seek absolute returns. Worldwide, coverage funds supervise billions in assets in strategies ranging from actions and credit to macro and global quantitative models. Its investor base are almost completely institutional investors and individual value of net value (UHNW), often accessed through private banks or feeding funds. Direct investment generally requires being an accredited or qualified investor, with typical minimum commitments of $ 1 million or more (elite funds frequently require $ 5 million to $ 10 million).
Many investors obtain exposure through the fund fund, which group multiple coverage funds for diversification, but add another layer of rates, often ~ 1 to 1.5% of annual management rates, plus 10% of the yield in addition to the rate structure “2 and 20” of the underlying funds. These vehicles remain opaque, disseminating minimal information on holdings or trades. Investors must trust managers who provide only a periodic and partial vision of their strategies. Access is exclusive and information is scarce.
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