This article covers the advent of tokenised funds and the opportunities it offers fund managers exploring alternative investment vehicles.

As of November 2025, a little over US$36 billion in tokenised real-world assets exist across 249 issuers. What this enables asset managers to do, is leverage tokenisation across two complementary perspectives: (i) as a distribution vector accessing previously underserved capital, and (ii) as an investment opportunity enabling novel alpha generation paired with operational improvements.

Tokenisation as distribution vector for on-chain capital accessibility

With HNWI and UHNW investors rapidly deploying capital into tokenised private credit, on-chain capital — which includes stablecoins and crypto-native investors, represents approximately US$290 billion in direct investment demand for professionally managed funds. These investors have so far, lacked native access to diversified yield-bearing alternatives and money market solutions with composability. 

Simultaneously, tokenisation has democratised access for mass affluent: with minimum private equity investments reducing from US$5 million to US$20,000, thus expanding the addressable investor base 10-50x. 

Consider this: US$48 billion flowed into private credit in H1 2025 alone, with 40% of HNW investors targeting >20% portfolio allocations to private assets. Simultaneously, evergreen fund structures have scaled to over US$350 billion AUM across 520 funds. The result: massive addressable private market capital now seeking fractionalised, liquid tokenised structures. Furthermore, an investor can trade private credit commitments on secondary markets within hours, previously impossible, while accessing 8-12% yields with $10-50K minimums, instead of US$500K minimums.

Generational wealth transition and digital-native preferences

Over the next two decades, US$124 trillion is expected to transfer from baby boomers to younger generations, with millennials inheriting US$45.6 trillion. Younger investors today allocate 12% of portfolios to digital assets and show 10 times higher willingness to deploy capital into private credit and alternatives than Baby Boomers.

For asset managers, this creates a massive structural advantage: younger inheritors possess investable assets but lack exposure vehicles matching their preferences, i.e. digital settlement, 24/7 accessibility, transparent on-chain data, composability. 

Asset managers tokenising funds, establish brand positioning and distribution relationships, before traditional competitors recognise the shift. 

Investment opportunities: Novel alpha mechanisms

When tokenised funds become native DeFi assets, they unlock yield farming, recursive leverage (looping), collateral multiplication, and cross-protocol composability strategies — mechanisms that simultaneously generate investor returns while reducing funding costs. Some use cases include:

• Yield farming and collateral deployment: Traditional Treasury holders receive single-layer yields while tokenised holders capture base yield plus collateral deployment income.
• Recursive leverage and looping: Tokenised private credit enables conservative recursive borrowing: depositing funds as collateral, borrowing stablecoins, redeploying borrowed capital into additional fund positions, while maintaining >200% collateralisation ratios. 
• Cross-protocol composability: RWA tokenisation has shown to enable autonomous yield-generating machines, automating returns across multiple protocols. 
• Institutional private credit strategies: Tokenised private equity feeders can enable almost instant liquidity in stablecoins, unlocking compliant, real-time liquidity backed by U.S. Treasuries with 9-12% projected returns plus automated distributions. 

The playbook for asset managers approaching tokenisation

Asset managers should consider how to approach tokenisation considering various criteria, some of which include:

• Product selection: Prioritise products suitable for mass affluent (US$1M-30M net worth) seeking private market access, particularly illiquid asset classes where fractionalisation creates demand. 
• Infrastructure: Leverage partnerships with institutional-grade platforms with proven ability to launch on-chain investment funds, rather than building internal infrastructure.
• Legal & regulatory considerations
  • Depending on how tokenisation is performed, tokenisation may require changes to your offering documentation and/or agreements with your service providers as well as regulatory notifications.
  • With respect to looping strategies and alike, these strategies require careful governance. Asset managers that enable looping or yield farming must explicitly authorise or restrict such practices in fund documentation.
• Risk management: Implement collateral monitoring infrastructure to track downstream deployment. Reserve a fixed buffer (say 10-15% AUM) in liquid instruments for frequent redemption support. If investing in recursive looping strategies, consider maintaining a significant (e.g. >200 percent) low LTV ratio, to pare potential liquidation loss (LLTV) and maintain healthy ratios. And finally, consider stress-test scenarios modelling >50% token value declines and demonstrate how your strategy is resilient to shocks.

The decision among asset managers to approach tokenisation has become a matter of “how” and “when”, considering the market’s competitive positioning from US$35.83 billion toward US$100+ billion by 2027.

References:

• RWA.xyz market data, November 2025tokenized-funds-the-third-revolution-in-asset-management-decoded.pdf
• Boston Consulting Group, “Tokenized Funds: The Third Revolution in Asset Management,” October 2024tokenization_part-i_online-1.pdf
• Jura Capital, “Private Credit Ladders & Structured Finance,” September 2025AIMA-Report-on-Tokenizing-Alternatives.pdf
• Hubbis, “Private Credit: The New Frontier in Wealth Management for 2025,” July 2025IOSCOPD809.pdf
• Evident Capital, “Private Asset Investing Trends for Wealth Managers 2025,” September 2025 antiersolutions
• Cerulli Associates & Altrata, “The Great Wealth Transfer and Demographic Shifts in Asset Management,” June-October 2025 sphericalinsights
• Fintechnews.ch, “Crypto Adoption on the Rise, Driven by Europe, Younger Demographics,” June 2025 prnewswire
• CoinLaw.io, “Cryptocurrency Adoption Statistics 2025,” October 2025 sciencedirect
• Block3Finance, “Best Yield Farming Strategies for 2025,” August 2025; OKX, “Tokenized Treasury Fund: How It’s Revolutionizing Finance,” August 2025 marketresearch
• Keyrock, “The Future of RWA Tokenisation: Bridging TradFi and DeFi,” October 2024; GrowthTurbine, “The Future of Asset Ownership: Why RWA Tokenization Is Revolutionizing Finance,” October 2025 hamiltonlane
• ECOS.am, “Liquidity Mining vs Yield Farming: Complete 2025 Guide,” July 2025; WunderTrading, “Maximizing Returns with Yield Farming,” July 2025 calastone

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Depending on how tokenisation is performed, tokenisation may require changes to your offering documentation and/or agreements with your service providers as well as regulatory notifications.