From the outset of our tokenisation efforts at Baillie Gifford, one principle has mattered above all: if a fund is tokenised, it must be the same, but better than the original.
That phrase keeps us focused on the client outcome rather than the technology itself. We cannot ask clients to accept a compromise simply because the infrastructure is new.
For Baillie Gifford, the standard should be higher. The question should not be: ‘Can this be tokenised?’ It should be: ‘Does tokenisation improve the client outcome without weakening the investment proposition?’
Put simply, the defining culture of the Digital Assets work at Baillie Gifford is that our traditional business's ceiling is our team's floor. We will not cross that line for quick commercial gains at the cost of clients. It must be the same, but better.
That is what we call the Baillie Gifford Standard.
The ‘same’ component
The investment proposition must remain intact: the same strategy, the same governance and legal protections, and the same seriousness about risk management. Tokenisation only earns its place if it improves the experience around that proposition – through better access, faster settlement, clearer records, lower friction, or greater operational resilience – without weakening what clients came to us for in the first place, or the regulatory processes we are proud to uphold.
As an example, in many tokenised structures in the market today, the token is only a digital representation of something held and recorded elsewhere. The real ownership record sits off-chain, meaning the complexity of traditional infrastructure remains, and the unit itself is not legally built for on-chain markets.
We can do better. For our funds, we wanted the token to be the fund, and the fund to be the token, with ownership recorded natively on-chain. One share class, one record, one source of truth – removing layers of duplication, improving transparency, and creating a legally robust asset for digital markets.
The ‘better’ component
The right test for the 'better' component is whether tokenisation solves a real problem. So what problems might it solve?
Friction
Fund dealing, transfer agency and settlement remain administratively heavy because, in the traditional system, a client's money passes through a long chain of intermediaries before it becomes an invested product. Dr Ian Hunt's work describes this as the 15 counterparties that sit between a client’s pound sterling and the invested product. (Dr Ian Hunt is a leading expert in buy-side investment processes, technology, and innovation.)
Putting a fund natively on-chain can shorten that chain – sometimes by removing unnecessary intermediaries, more often by giving existing participants a shared digital infrastructure that is more efficient, scalable and automated. The prize is not tokenisation as a cosmetic wrapper. It is reducing the operational drag between client capital and the investment outcome, and lowering the structural cost of investing.
Collateral mobility
In modern markets, high-quality assets are not always useful where they sit. Collateral can be locked in the wrong account, trapped in the wrong wrapper, or too slow to move when it is needed. Tokenisation can change that by making ownership easier to verify, transfer and pledge. A tokenised asset can carry its own proof of ownership and use rules-based code to move as collateral, without the same chain of manual checks, confirmations and reconciliations.
That matters because large pools of value – fund interests, private assets, money market liquidity – are often economically valuable but operationally inert. The UK gilt crisis after the 2022 mini-budget showed the cost of that inertia: UK strategies needed liquidity quickly and were forced into rapid gilt sales, amplifying stress. Some options existed, but they were clunky, expensive and difficult to execute at speed. If tokenised money market fund units had been widely accepted as transferable, high-quality collateral, some investors might have been able to meet margin calls by pledging liquid fund interests rather than selling gilts into a falling market.
That is the point. Tokenisation is not about making markets more speculative. It is about making existing liquidity usable at the moment of stress.
Distribution and access
Tokenisation can make investment strategies easier to distribute, hold and transfer by moving the ownership record on to shared digital infrastructure, rather than burying it inside layers of legacy administration. That does not mean every asset should be available to every investor – suitability, regulation and client protection remain essential. But it does mean products become easier to integrate into the platforms, wallets and digital environments where new types of clients increasingly want to access them.
Eligibility, jurisdictional rules, transfer restrictions, reporting needs and liquidity terms can be managed more efficiently in the infrastructure itself, making distribution more flexible without weakening controls. The operating model can adapt to the client and the channel, rather than forcing them through the constraints of legacy administration.
Same, but better
That is what we mean by same, but better: new rails that allow excellent investments to be owned, without compromise.
Less friction. Greater utility. Better access.
The same investment proposition our clients chose. Delivered on infrastructure built for the next thirty years.
Risk factors
The views expressed should not be considered as advice or a recommendation to buy, sell or hold a particular investment. They reflect opinion and should not be taken as statements of fact nor should any reliance be placed on them when making investment decisions.
This communication was produced and approved in May 2026 and has not been updated subsequently. It represents views held at the time of writing and may not reflect current thinking.
Potential for Profit and Loss
All investment strategies have the potential for profit and loss, your or your clients’ capital may be at risk. Past performance is not a guide to future returns.
This communication contains information on investments which does not constitute independent research. Accordingly, it is not subject to the protections afforded to independent research, but is classified as advertising under Art 68 of the Financial Services Act (‘FinSA’) and Baillie Gifford and its staff may have dealt in the investments concerned.
All information is sourced from Baillie Gifford & Co and is current unless otherwise stated.
The images used in this communication are for illustrative purposes only.
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