Baillie Gifford, one of the United Kingdom’s oldest and largest investment managers, has launched what it describes as the country’s first fully native UK-regulated tokenized bond fund on public blockchains. The new product, called the Baillie Gifford Enhanced Yield Fund (BAGEY), is issued directly on Ethereum and Solana, marking a significant step in the use of blockchain technology for regulated investment funds.
Founded 118 years ago, the Edinburgh-based firm manages approximately £286 billion ($377 billion) in assets. Unlike many tokenized investment products already on the market, BAGEY is designed so that blockchain technology is part of the official ownership record rather than simply providing a digital representation of an existing fund.
The fund is structured as a UK-regulated Open-Ended Investment Company (OEIC) and invests in an actively managed portfolio of short-duration corporate bonds. According to Baillie Gifford, eligible investors can expect a target annual yield of around 7%, although returns are not guaranteed and remain subject to market conditions.
BNY is providing the tokenization and wallet infrastructure supporting the fund, while NatWest Trustee and Depositary Services serves as the depositary, maintaining the oversight and investor protections required under UK regulations.
Key Takeaways
Baillie Gifford has launched BAGEY, a UK regulated tokenized bond fund issued natively on the Ethereum and Solana blockchains.
Unlike most tokenized funds, BAGEY records investor ownership directly on public blockchains, making the blockchain part of the official ownership register.
The fund is structured as a UK regulated Open Ended Investment Company (OEIC), with BNY providing tokenization infrastructure and NatWest serving as the depositary.
The launch follows updated guidance from the UK’s Financial Conduct Authority, which allows authorized investment funds to use distributed ledger technology for ownership records.
The initiative marks another step in the institutional adoption of real world asset tokenization, demonstrating how blockchain can modernize fund administration while operating within existing regulatory frameworks.
More Than a Blockchain Wrapper
Most tokenized funds launched so far have placed digital tokens on top of traditional investment structures. In those cases, the legal ownership register remains within conventional financial systems, while the blockchain token merely represents an investor’s interest.
BAGEY takes a different approach.
Baillie Gifford says the blockchain itself forms part of the official ownership register, meaning investor holdings are recorded natively on Ethereum and Solana instead of being mirrored from an off-chain database.
Theo Golden, Head of Digital Assets and Tokenization at Baillie Gifford, has argued that simply digitizing existing infrastructure does not fundamentally improve financial markets. The firm believes native issuance offers a stronger model because ownership records exist directly on public blockchain networks. The distinction may appear technical, but it has important implications. A native on chain register could eventually support faster settlement, improved transparency, and more efficient fund administration while remaining within an established regulatory framework.
Backed by Recent UK Regulatory Guidance
The launch comes after the UK’s Financial Conduct Authority introduced updated guidance allowing authorized investment funds to incorporate distributed ledger technology into their operations.
The FCA’s PS26/7 policy statement provides a framework for using blockchain-based ownership registers while maintaining existing investor protection standards. That regulatory clarity has encouraged several institutions to accelerate tokenization initiatives, but Baillie Gifford is among the first major asset managers to issue a regulated fund natively on public blockchain infrastructure.
BNY believes the launch demonstrates how tokenization is moving beyond experimental projects.
“This shows tokenization has moved from concept to real world application.”
The initiative also reflects growing collaboration between traditional financial institutions and blockchain infrastructure providers rather than competition between the two sectors.
Why Ethereum and Solana
Baillie Gifford selected both Ethereum and Solana to support the fund’s issuance.
Ethereum remains the leading blockchain for institutional tokenization thanks to its mature smart contract ecosystem and broad adoption among financial institutions. Solana complements it by offering significantly lower transaction costs and higher throughput, making it suitable for faster and more efficient transaction processing.
Using both networks allows the fund to benefit from the strengths of each ecosystem while giving investors greater flexibility.
What Comes Next
While the launch represents an important milestone for tokenized real world assets, several questions remain unanswered.
Baillie Gifford has not yet demonstrated whether BAGEY units will eventually support secondary market trading, around the clock settlement, or broader use as collateral across financial markets. Those capabilities will depend on operational testing, market adoption, and continued regulatory development.
The fund is currently available only to qualified investors in the United Kingdom, Switzerland, and the Cayman Islands, limiting initial participation while the model is tested within a controlled environment.
Still, the significance of BAGEY extends beyond a single investment product. It demonstrates that a major traditional asset manager is prepared to place regulated fund ownership directly onto public blockchain infrastructure rather than using blockchain solely as a distribution tool.
As financial institutions continue exploring tokenized securities, bonds, and other real world assets, Baillie Gifford’s launch provides one of the clearest examples yet of blockchain becoming part of the operational foundation of regulated investment funds rather than simply sitting alongside existing systems.
Disclaimer: This article is intended solely for informational purposes and should not be considered trading or investment advice. Nothing herein should be construed as financial, legal, or tax advice. Trading or investing in cryptocurrencies carries a considerable risk of financial loss. Always conduct due diligence before making any trading or investment decisions.
