Ondo Finance (CRYPTO: $ONDO) is set to tokenize three investment portfolios that use strategies provided by BlackRock (NYSE: $BLK), giving investors a new way to access the asset manager’s investment strategies through digital tokens.
Ondo Finance is launching seven tokenized model portfolios on Thursday. Three will track BlackRock strategies, including high-income, diversified growth and high-growth, according to a Thursday report by the Wall Street Journal.
Model portfolios are preset investment strategies that financial advisers can use instead of building portfolios from scratch. Their use has grown quickly in recent years.
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Broadridge Financial Solutions found that 87% of 400 advisers surveyed used model portfolios, while 25% relied on them exclusively. Assets held in model portfolios reached $9.8 trillion in June, up from $7.7 trillion a year earlier.
BlackRock’s portfolios will hold a mix of stock, bond, and Bitcoin (CRYPTO: $BTC) exchange-traded funds, depending on the strategy. Ondo will issue a token representing each portfolio. When investors buy the tokens, software will automatically purchase shares of the underlying ETFs.
The products will initially be offered to investors outside the United States. Token holders will not have direct shareholder rights in the securities held by the portfolios, but they will be able to transfer and trade the tokens around the clock and use them as collateral for borrowing.
John Hoffman, head of product portfolios at Ondo, said customers had been asking for access to investment funds that could be held in crypto wallets rather than traditional brokerage accounts.
BlackRock launched its first tokenized money-market fund in 2024 and has invested in tokenization firm Securitize.
Other major financial firms are also moving into the sector. JPMorgan Chase (NYSE: $JPM) and Invesco (NYSE: $IVZ) have launched tokenized funds, while the New York Stock Exchange and Nasdaq are developing their own tokenization platforms.