Investor preferences in asset management are evolving rapidly, with a notable shift toward structures that emphasise direct ownership, customisation and transparency. The use of separately managed accounts (SMAs), for example, has steadily increased, with Cerulli Associates projecting that assets managed under these vehicles will surpass $2 trillion this year. This trend is also reflected in the rising interest in investment vehicles like funds-of-one and special purpose vehicles (SPVs), and in tokenised assets. Each of these structures provides an added level of control and visibility that investors increasingly demand. In a market landscape marked by uncertainty, we see a heightened desire for tailored solutions.
Funds-of-One: Customisation and Transparency at the Forefront
In recent years, institutional investors and high-net-worth individuals have been drawn to more personalised investment solutions, moving away from traditional pooled funds toward vehicles like funds-of-one and special purpose vehicles. These structures allow for tailored strategies that align with the individual goals, risk appetites, and time horizons of the investor.
Funds-of-one are designed for a single investor, offering increased control over investment decisions and asset allocation. This level of customisation also comes with enhanced transparency, as investors have clearer insight into their capital allocations. Unlike commingled pools, funds-of-one offer a more active approach to investing, which is increasingly preferred over traditional passive participation.
A 2023 report from Cerulli Associates highlighted that SMAs saw an 8% year-over-year growth, with total assets reaching $1.7 trillion. This shift reflects a broader market movement toward more bespoke investment solutions, driven by the desire for greater control, tailored strategies, and the ability to track specific allocations closely.
Tokenisation: A New Paradigm for Asset Ownership
The growing demand for funds-of-one and special purpose vehicles highlights a larger desire among investors for direct ownership. This trend is particularly evident in the increasing interest in tokenisation, which continues to attract attention. Tokenisation offers similar benefits to funds-of-one, notably more direct ownership, customisation, and transparency. By digitising traditional real assets – such as real estate, precious metals, and private equity – tokenisation allows investors to fractionalise ownership and trade these assets on blockchain platforms. This technology democratises access, enabling broader and more active participation in previously exclusive asset classes.
Investors are looking for ways to take control of their financial futures, and increasingly seek to understand where their money is going, how it’s being used, and whether it aligns with their broader financial and personal goals. Tokenisation offers a new form of ownership that prioritises choice, transparency and accessibility.
Alongside these offerings, tokenisation democratises access to assets that were previously difficult to trade. It leverages key DeFi technologies, such as blockchains that support tokenisation and fractional ownership, providing a way for investors to gain exposure to high-value assets with lower capital thresholds. This democratisation aligns with an increased level of transparency, thanks to blockchain’s immutable record of ownership which is accessible to users at any time. While the landscape is still evolving, the growing adoption of blockchain-enabled ownership frameworks could significantly redefine how investors interact with their assets.
Potential Challenges
While the appeal of these investment structures is clear, challenges remain which keep a few hesitant to explore these solutions. Funds-of-one and SPVs, while offering customisation, can involve higher administrative costs and complexity, underscoring the importance of choosing the right jurisdiction and partners for execution. In addition, the digitised space is navigating an evolving regulatory landscape and there remain questions around the legal frameworks governing digital ownership and the treatment of tokenised vehicles at large.
In response, some jurisdictions are proactively establishing frameworks and guidance to bring clarity to the tokenised sector, and while achieving global consensus is still out of reach, it is essential for investors and managers to partner with the right domiciles. The right jurisdiction should be able to support ongoing innovation and transformations in the industry whilst not compromising a minimal change outlook to regulatory frameworks.
Final Thoughts
The increasing preference for direct ownership, transparency, and customisation reflects a larger shift in how investors engage with their portfolios. As these trends continue to evolve, asset managers and jurisdictions alike will need to adapt, balancing the benefits of direct ownership with the need for appropriate safeguards and operational efficiency. Those who embrace this shift toward tailored solutions and innovative structures like tokenised assets are poised to capitalise on the future of asset management.
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