QuantCapTokenization is not just about putting individual stocks and funds onchain. The next step could be entire investment portfolios that can be traded, rebalanced and eventually managed in real-time.
BlackRock offers a glimpse of how tokenization may change your investment portfolio
Tokenization is not just about putting individual stocks and funds onchain. The next step could be entire investment portfolios that can be traded, rebalanced and eventually managed in real-time.
This is an excerpt from CoinDesk's new ‘Tokenization Weekly’ newsletter that will be launching soon. Sign-up details will be here when it goes live.
For most investors, building a portfolio still means either buying a collection of stocks, bonds and funds themselves or handing the job to an asset manager.
Tokenization may eventually blur that distinction.
BlackRock, the world's largest asset manager, offered a glimpse of what that could look like with Ondo Finance via Intelligent Portfolios, packaging professionally constructed investment strategies into individual tokens on the blockchain.
The three portfolios, developed by BlackRock for Ondo, combine different assets into strategies focused on high income, diversified growth and high growth. Instead of buying and rebalancing the underlying investments separately, an investor can hold a single token representing the portfolio.
That may sound like a small change. After all, mutual funds and ETFs have bundled investments into single products for decades.
But putting the portfolio itself onchain potentially gives it characteristics that traditional structures don't have. It can move between wallets and platforms, be visible onchain and potentially be used as collateral for borrowing or plugged into other financial products.
That starts to move tokenization beyond simply creating blockchain versions of individual stocks, bonds and funds.
Why this matters
Most of the tokenization boom so far has focused on individual assets: Treasury funds, private credit, stocks and ETFs.
The BlackRock-Ondo products point toward the next layer: combining those assets into investment strategies and putting the strategy itself onchain.
Crypto investment firm Pantera described that shift in a fresh report as moving “from single securities to onchain portfolios.”
“For investors, the practical change is a reduction in the number of positions and rebalancing decisions they need to manage themselves,” the firm's analysts wrote.
There is a large existing business behind that idea. Model portfolios — pre-built combinations of funds and other investments used by wealth managers — held about $9.8 trillion in assets in June, according to Broadridge.
Tokenization could give asset managers another way to distribute those strategies.
BlackRock itself described the Ondo partnership in those terms.
“Tokenization creates new ways for portfolio strategies to be delivered through digital infrastructure,” Lisa O'Connor, BlackRock's global head of model portfolio solutions, said in the announcement.
Others are already exploring similar ways to put entire investment strategies onchain.
Digital asset manager Bitwise introduced Automated Token Portfolios with Coinbase (COIN) and a16z-backed Glider in August, allowing eligible non-U.S. investors to follow Bitwise-designed portfolios of tokenized stocks while keeping the individual assets in their own wallets. Glider's technology automatically adjusts the holdings to keep them aligned with the firm's target weights.
Ondo wraps the portfolio exposure into a single transferable token. Bitwise leaves the individual tokenized stocks in an investor's wallet while the software manages the allocation.
While the approaches slightly differ, they point in the same direction: portfolio management itself becoming software that can operate directly on blockchain-based assets.
Why this is a big deal
Those products hint at a bigger change: what your investment portfolio could look like in the future.
Tom Staudt, president and chief operating officer of ARK Invest, told CoinDesk in an interview that tokenization could eventually change not just how investors buy funds, but what can go into a portfolio in the first place.
Traditional portfolio models were built when everyday investors had access to a much narrower menu of assets, he said. Private equity, private credit and crypto were largely unavailable, international markets were harder to reach, and even the universe of funds was much smaller.
Tokenization could make more of those investments available through the same digital rails.
That becomes even more powerful when you couple it with AI. Software could potentially build a portfolio around an average investor's specific goals, risk tolerance or even individual tax situation, while tokenization makes a wider range of assets actually available to buy and sell.
“It's all great to have AI tell you what a perfect portfolio is, but if you can't access the assets, it doesn't really matter,” Staudt said. “Blockchain and tokenization is clearly going to open up funds, strategies, asset classes and jurisdictions that are not currently available for everyone”
For investors, that could mean moving beyond today's relatively fixed menu of stocks, bonds and funds toward portfolios assembled from a much broader set of building blocks.
For asset managers, it could make products from different firms easier to combine into a single portfolio, changing both how managers compete and how they work together.
As Staudt put it: “It's sort of taking democratization to the next level.”
Ondo had already hinted at an even more automated version of this future.
In a June interview, John Hoffman, then newly appointed head of portfolio products at Ondo, said tokenization was following a similar path to ETFs, only much faster.
He envisioned autonomous software continuously monitoring markets and allocating capital through professionally managed portfolios that adjust as conditions change.
“Our end state will be portfolios that are professionally managed, real-time and adjusting to market circumstances and data changes,” Hoffman said.
Getting there, however, will require more than tokenized stocks and funds. The industry first needs a broader universe of assets onchain, prime-brokerage infrastructure and asset-management strategies that can actually be executed natively on blockchain networks, Hoffman said.
Dan Romero, chief business officer at Stripe-backed blockchain Tempo, told CoinDesk he sees tokenization trailing by a few years the disruption that stablecoins brought.
Stablecoins put cash onchain. Now, tokenization puts more of the investable universe onchain. Combining the two, he said, let developers create completely new financial products.
Romero compared it to the rise of specialized neobanks: once the underlying infrastructure became easier to access, companies could build products tailored to specific customers and use cases rather than simply recreating a traditional bank.
“All of that same infrastructure is now going to be available with tokenized assets and stablecoins that people are going to be able to build really interesting new financial experiences,” he said.
That's the bigger takeaway behind BlackRock's latest experiment.
The first stage of tokenization was about getting individual assets onto blockchains.
The next may be about what happens once all those assets are onchain: putting them together into portfolios that can be managed, rebalanced and moved around more easily — and eventually tailored much more closely to your needs.
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