Today, investment manager Hamilton Lane announced a deal with digital asset securities firm Securitize, to tokenize three of its funds. Hamilton Lane has $835 billion in assets under management and the funds to be tokenized include unlisted equity, private credit, and secondary transactions.

The news follows last month’s announcement that Securitize would use blockchain to tokenize part of KKR’s Healthcare Strategic Growth Fund II.

Historically, Hamilton Lane’s funds have been limited to institutional investors. New tokenized feeder funds will be created in Q4, allowing a broader investor base to access the funds. Clients will still need to be in good standing, which means a net worth of more than $1 million or income greater than $200,000.

However, from an asset manager’s perspective, that group is a massive market. And one that can be clearly measured.

According to the Federal Reserve’s 2019 Survey of Consumer Finances, the top 10% of families have incomes over $236,000. This group owns 71% of aggregate personal wealth or $68.4 trillion in assets. The figure rises to $82 trillion if defined benefit pensions are included. Not all of that is going to be invested in funds. Pensions, real estate, and business ownership make up significant proportions of wealth. Still, these accredited investors had $22 trillion in financial assets in 2019, not including pensions.

“This collaboration with Securitize is our latest step in enabling access to the strong returns and return opportunities generated within the private markets space for a new set of investors, while increasing ease of use and transparency through the use of blockchain technology,” said Victor Jung, director. of Digital Assets on Hamilton Lane.

Therefore, converting funds into security tokens allows these private investors to put money into assets that were previously only accessible to institutions. Reduces issuance and administration costs, and allows for fractional ownership.

Securitize has multiple subsidiaries responsible for different parts of the process. The company’s digital transfer agency performs the tokenization. Secondary funds are managed by Securitize Capital, the digital asset management arm. And your broker Securitize Markets allows trading on the secondary market.

While fund tokenization has been widely discussed for years and multiple blockchain platforms have been developed, this year sees the start of some momentum. In other jurisdictions, companies like ADDX are active in Singapore and the UK, the top 5 asset managers, abrdn recently made an investment in digital asset exchange Archax.