Baillie Gifford launches native tokenised bond fund in Hong Kong

Baillie Gifford has introduced The Baillie Gifford Enhanced Yield Fund (BAGEY), its first publicly-available, natively tokenised investment fund for professional investors in Hong Kong.

BAGEY is an actively managed portfolio of short-duration government and corporate bonds, currently yielding 7% and average credit quality of BBB.

Unlike some existing tokenised funds that rely on intermediaries or Special Purpose Vehicle (SPV) structures, BAGEY is issued natively on public blockchain infrastructure. Under this structure, the token itself represents the investor's holding and the blockchain serves as the official record of ownership. By eliminating the need for parallel records, this approach creates a simpler, more transparent, and legally robust framework built from the ground up for digital markets, while fully maintaining the standards of a regulated investment fund.

Eligible professional investors can subscribe and redeem Fund tokens using fiat currency or stablecoins, initially USDC. The Fund is denominated in US dollars and is available on Ethereum and Solana. Utilising these stablecoin rails, BAGEY will also facilitate T+0 redemptions up to 10% of NAV, and feature an indicative NAV for secondary market trading and ecosystem use cases.

Baillie Gifford collaborated with BNY to co-design the product, combining Baillie Gifford’s active investment expertise and long-term approach, with BNY’s innovative, resilient infrastructure. BNY will provide tokenisation and wallet infrastructure for BAGEY, supporting a direct issuance model designed to reduce operational complexity and improve transparency. NatWest Trustee and Depositary Services Limited will act as the fund’s Depositary.

Theo Golden, head of digital assets and tokenisation at Baillie Gifford, said: “As one of the leading global financial centres, Hong Kong is well positioned to drive financial innovation. This is an important step towards bringing new forms of investment products and expanded utility to both onchain and traditional investors.

“Tokenisation will only matter if it makes finance fundamentally better. Most tokenised funds place a digital wrapper around existing funds, BAGEY is different. Investors hold the fund directly on blockchain, creating a simpler ownership model for increasingly digital financial markets.

“Our ambition is not tokenisation for its own sake, but to build investment infrastructure that clients can trust, with cleaner ownership, stronger governance and faster settlement. Same discipline; better rails.”

Stuart Dunbar, partner at Baillie Gifford, added: “We have been a first mover in this space, but done so with clients in mind. Tokenisation is not a short-term theme for us, we believe it will become part of mainstream investment infrastructure over time. Our role is to give clients access to this innovation through investment structures that are robust, transparent and built to endure."

Fund highlights

• Actively managed portfolio of short-duration government and corporate bonds
• Structured as a UK-regulated OEIC, authorised by the FCA
• Issued natively on Ethereum and Solana public blockchains
• Offers daily dealing with subscriptions and redemptions in fiat or $USDC (subject to applicable restrictions)
• Portfolio currently yielding 7%, in a two-year duration and average credit quality of BBB

Re-disseminated by Wealth and Society