We’re bringing mutual funds into the 21st Century, by-passing ETFs straight to Mutual Funds 3.0.
Fund ownership is opaque due to complex distribution mechanisms involving omnibus accounts making monitoring and oversight difficult 2. ETFs (Mutual Funds 2.0) helped bring secondary market liquidity to the asset class and yet $35tn of assets still sit in Mutual Funds. A complex market structure has provided significant inertia.
Using a single distributed ledger we replace the transfer agent function by creating a digital share class of pre-existing funds. This share class has improved investor granularity, instantly provides access to a secondary market and has reduced trading and settlement frictions.
Fund managers that truly care about their end investor will want to offer a share class that brings their funds into the 21st century. By-passing ETFs (Mutual Funds 2.0) their investors will have instant access to a secondary market, reducing primary market churn on their own fund and giving investors alternative means of liquidity. No longer will investor holdings be kept in nominee or omnibus accounts. On the distributed ledger data is held at an investor level. Funds can now understand their investor base and plan strategically.
Having qualified for direct support from the FCA innovation hub the next steps are to find an appropriate partner to take on to the sandbox programme to allow testing in a live environment.