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Baillie Gifford Launches Tokenized Bond Fund on Ethereum and Solana With BNY Mellon

Baillie Gifford is bringing a tokenized bond fund on-chain on Ethereum and Solana with BNY Mellon. Its structure and target audience show how regulated funds are continuing to embrace blockchain.

By Mike Hesp
• 2 min read
Baillie Gifford Launches Tokenized Bond Fund on Ethereum and Solana With BNY Mellon

Key Takeaways

  • Baillie Gifford launched the tokenized bond fund BAGEY on Ethereum and Solana together with BNY Mellon.
  • The fund actively invests in short-term public corporate bonds and is set up as a UK OEIC.
  • BNY Mellon provides the tokenization and wallet infrastructure, while NatWest Trustee and Depositary Services acts as depositary.

Baillie Gifford, a well-known investment firm from Edinburgh with a 118-year history, has launched a new tokenized bond fund together with BNY Mellon. The Baillie Gifford Enhanced Yield Fund (BAGEY) gives investors access to an actively managed portfolio of short-term public corporate bonds and uses the Ethereum and Solana blockchains.

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The fund is structured as an Open-Ended Investment Company (OEIC) under UK regulation, with capital from multiple investors spread across stocks and bonds. With a current yield of around 7%, the fund is aimed at investors in the United Kingdom, Switzerland, and the Cayman Islands, within the applicable laws and regulations.

Theo Golden, head of digital assets and tokenization at Baillie Gifford, says this fund is not just a token layered on top of a traditional fund. Instead, it is a fund issued fully on-chain, with the blockchain serving as the record of ownership. That gives investors direct ownership and a direct claim on the fund.

Partnership With BNY Mellon and NatWest

BNY Mellon provides the tokenization and wallet infrastructure for the fund, while NatWest Trustee and Depositary Services acts as depositary. This partnership highlights the growing integration of blockchain technology into traditional financial structures.

The move lines up with earlier efforts by Baillie Gifford, which has been actively working on tokenizing real-world assets to boost liquidity and operational efficiency. BNY Mellon is also a leader in bringing blockchain into traditional finance, as shown by its recent launch of tokenized deposit services for institutional clients. That fits into a broader trend where major financial firms are using tokenized assets to make traditional markets more efficient and easier to access.

Why This Matters for European Investors

For European investors, this move could point to broader acceptance and regulation of tokenized funds within the traditional financial sector. Using public blockchains like Ethereum and Solana for regulated funds could make investments more accessible and transparent, which may open up new opportunities in European markets.

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