Hong Kong's Securities and Futures Commission has authorized Baillie Gifford's Enhanced Yield Fund (BAGEY), the city's first fully native tokenized fund for professional investors, the firm announced Wednesday. The actively managed fixed-income fund invests in short-duration government and corporate bonds and is issued natively on Ethereum and Solana, with the blockchain serving as the official ownership register.
How It Works
Built with BNY, BAGEY allows eligible investors to subscribe and redeem using fiat currency or USDC. The fund supports T+0 redemptions for up to 10% of NAV and provides an indicative NAV for secondary market activity. Unlike most tokenized funds that place a digital wrapper around existing funds, BAGEY gives investors direct onchain ownership, creating a simpler ownership model for digital financial markets, according to Theo Golden, Head of Digital Assets and Tokenisation at Baillie Gifford.
Regulatory and Market Context
The approval reinforces Hong Kong's ambition to become a global tokenization hub, showcasing how regulated products can benefit from blockchain-based ownership, faster settlement, and improved transparency. The UK-regulated OEIC currently offers a portfolio yielding approximately 7% with an average BBB credit rating and a two-year duration. BNY provides tokenization and wallet services, while NatWest Trustee and Depositary Services acts as the fund's depositary.
Industry Perspectives
"Tokenization will only matter if it makes finance fundamentally better," Golden said, emphasizing the goal of building investment infrastructure clients can trust with cleaner ownership, stronger governance, and faster settlement. Stuart Dunbar, Partner at Baillie Gifford, added that tokenization is not a short-term theme but will become part of mainstream investment infrastructure over time, and the firm aims to give clients access through robust, transparent structures built to endure.