Investment manager Baillie Gifford has introduced the Baillie Gifford Enhanced Yield Fund (BAGEY) in partnership with BNY, marking a significant step in the tokenization of traditional financial products. The fund is designed as a fully native on-chain investment vehicle rather than a digital representation of an existing fund.
The product gives eligible professional investors access to an actively managed portfolio of short-duration fixed-income assets while using blockchain technology as the official ownership record.
Baillie Gifford Brings Fund Ownership Directly On-Chain
Unlike many tokenized investment products that place a digital token on top of traditional fund infrastructure, BAGEY was created as a natively issued fund. According to Baillie Gifford, investors hold the fund directly through blockchain-based ownership records.
The fund is denominated in US dollars and operates under a UK-regulated open-ended investment company structure. Ownership records are maintained on public blockchains, specifically Ethereum and Solana, making the blockchain the legal source of truth for investor holdings.
Theo Golden, Head of Digital Assets and Tokenisation at Baillie Gifford, highlighted the importance of native issuance in the firm’s strategy.
“Tokenisation will only matter if it makes finance fundamentally better. A digital wrapper around yesterday’s infrastructure is not enough. Clients do not need novelty for its own sake; they need cleaner ownership, stronger governance, faster settlement and infrastructure they can trust.
The Baillie Gifford Enhanced Yield Fund is not a token placed on top of a fund. It is a fund issued on-chain, with the blockchain serving as the register of record. Investors hold the fund directly: direct ownership, direct recourse.
Theo Golden
Head of Digital Assets and Tokenisation – Baillie Gifford
BNY Provides Blockchain Infrastructure
Baillie Gifford developed the product in collaboration with BNY, which will provide tokenization and wallet infrastructure for the fund, subject to regulatory approvals. The structure is designed to simplify operational processes while increasing transparency for investors.
NatWest Trustee and Depositary Services Limited will serve as the fund’s depositary.
Katey Neate, Global Head of Investor Solutions at BNY, described the launch as an important development for traditional finance.
“Tokenisation has moved from concept to real-world application, and this launch shows how regulated fund structures can evolve to meet the needs of a more digital, connected marketplace.
Katey Neate
Global Head of Investor Solutions – BNY
She added that the initiative could serve as a blueprint for how traditional financial assets are issued and serviced through blockchain-enabled infrastructure.
Focus on Fixed Income and Institutional Investors
The fund invests in public corporate bonds and is designed for professional investors seeking blockchain-based access to regulated fixed-income products.
According to Baillie Gifford, the portfolio currently offers an approximate 7% yield, a two-year duration, and an average credit quality rating of BBB.
Investors can mint and redeem fund tokens directly using stablecoins or fiat currency. The fund will initially support USDC and offer daily dealing alongside a daily net asset value calculation.
The company said public blockchains improve interoperability and make the fund compatible with a growing ecosystem of tokenized assets, stablecoins, and on-chain financial applications.
Growing Institutional Interest in Tokenization
The launch reflects a broader trend among major financial institutions exploring blockchain-based infrastructure for traditional investment products. By placing regulated fund ownership directly on-chain, Baillie Gifford aims to create investment products that can operate more efficiently within digital financial markets.
The firm believes tokenization is becoming an important part of the future financial system rather than a short-term innovation trend.
Stuart Dunbar, Partner at Baillie Gifford, said:
“Tokenisation is not a short term theme for us, but an integral evolution in how financial products may be built, distributed and used over time.
Stuart Dunbar
Partner – Baillie Gifford