Schroders Invest in Digital Assets Firm Forteus

Schroders has bought a minority stake in Forteus, an investment manager focused on digital assets, to explore issuing digital tokens to investors.

The FTSE 100-listed asset manager, which oversees £731.6bn on behalf of customers, said on Tuesday that it had invested in the Zurich-based company, which specialises in blockchain technology and digital investments.

The deal is part of a push by Schroders to develop research in the sector and to form a strategy for tokenisation, the process of issuing digital tokens to investors instead of traditional shares or fund units.

"We've seen peak mutual fund," said Schroders chief executive Peter Harrison in an interview. He noted that money was shifting from mutual funds to personalised portfolios, adding that this would increase with the growing adoption of ledger technology.

The investment comes as crypto markets have been nosediving, with analysts likening it to the 2008 financial crisis for the digital asset sector. Tightening central bank policy has led investors to flee high-risk assets, prompting a brutal sell-off in risky tokens since the beginning of the year.

The total value of crypto markets has fallen from a peak of more than $3tn in November to less than $1tn, while bitcoin -- the largest cryptocurrency -- has shed about 70 per cent of its value.

The market crash has returned crypto prices to levels not seen since 2017 and has stricken several large companies and projects, including crypto lender Celsius, which filed for bankruptcy in the US last week.

Harrison said he was not concerned about the sell-off. "This deal is not about cryptocurrencies. It's about how do we get tokenisation mainstream." He said that the focus was on blockchain "as a means of ownership" rather than cryptocurrencies "as a means of payment".

Forteus is the fund management arm of Numeus Group, a digital asset investment firm based in Switzerland run by Nobel Gulati, former chief executive of Two Sigma Advisers.

The deal comes as Britain's asset management industry is pushing the government to establish a new class of fund employing blockchain technology.

The Investment Association, the UK's asset management trade body that oversees almost £10tn, is calling for the government and City regulator to work "at pace" to approve blockchain-traded funds. These would issue digital tokens to investors instead of traditional shares or fund units.

Blockchain technology can open access to assets such as alternatives, usually the preserve of wealthy investors, because once they are tokenised the investment minimums can be lowered.

California-based Franklin Templeton launched the first US mutual fund to use blockchain to process transactions and record share ownership in April last year.

Source: Financial Times