Image Credit: Shutterstock
Key Takeaways
- BlackRock created high income, diversified growth and high growth strategies that investors can hold as one token each.
- A tokenized portfolio can move between wallets and platforms and potentially serve as collateral, which a traditional fund share cannot.
- Model portfolios held about $9.8 trillion as of June, and Bitwise is pursuing a rival approach that keeps tokenized stocks in investors’ own wallets.
BlackRock, the world’s largest asset manager, has begun packaging professionally constructed investment strategies into individual blockchain tokens through a partnership with Ondo Finance, extending tokenization beyond individual stocks and funds toward entire portfolios.
The move, announced through Ondo’s new Intelligent Portfolios product, points to a shift in how tokenization could eventually change what investors hold and how they hold it.
Three Portfolios, One Token Each
BlackRock developed three portfolio strategies for Ondo focused on high income, diversified growth and high growth, each combining a mix of underlying assets into a single investment approach. Rather than buying and separately rebalancing each underlying holding, an investor can hold one token representing the entire portfolio.
Mutual funds and exchange-traded funds have bundled multiple investments into single products for decades, so the basic concept is not new.
What changes is what the wrapper itself can do once it exists on a blockchain: a tokenized portfolio can move between wallets and platforms, remain visible on-chain, and potentially be used as collateral for borrowing or plugged into other financial products in ways a traditional fund share cannot.
BlackRock’s global head of model portfolio solutions, Lisa O’Connor, described the partnership as a new distribution channel for portfolio strategies.
“Tokenization creates new ways for portfolio strategies to be delivered through digital infrastructure.”
A Large Existing Market Moving On-Chain
Most tokenization activity to date has focused on individual assets such as Treasury funds, private credit, stocks, and ETFs.
The BlackRock-Ondo products point toward combining those assets into investment strategies and putting the strategy itself on-chain, a shift crypto investment firm Pantera Capital described in a recent report as moving from single securities to on-chain portfolios.
The report noted that the practical change for investors is a reduction in the number of positions and rebalancing decisions they need to manage themselves.
That shift builds on a substantial existing business. Model portfolios, pre-built combinations of funds and other investments used by wealth managers, held about $9.8 trillion in assets as of June, according to data from Broadridge.
Tokenization offers asset managers a new way to distribute those existing strategies rather than requiring them to build an entirely new product category from scratch.
Other firms are pursuing a related but distinct approach. Digital asset manager Bitwise introduced Automated Token Portfolios in August in partnership with Coinbase and venture-backed trading platform Glider. It lets eligible non-U.S. investors follow Bitwise-designed portfolios of tokenized stocks while keeping the individual assets in their own wallets, with Glider’s technology automatically rebalancing holdings to match target weights.
Where Ondo wraps portfolio exposure into a single transferable token, Bitwise instead leaves individual tokenized stocks in an investor’s own wallet while software manages the allocation around them. Both approaches point toward portfolio management increasingly functioning as software operating directly on blockchain-based assets.
A Broader Shift in What a Portfolio Can Contain
Tom Staudt, president and chief operating officer of ARK Invest, said in an interview that tokenization could eventually expand not just how investors buy funds, but what assets are available to put into a portfolio in the first place.
He said traditional portfolio models were built at a time when everyday investors had access to a comparatively narrow menu of assets, with private equity, private credit and crypto largely unavailable and international markets harder to reach.
Staudt said combining that broader asset access with AI-driven portfolio construction could let software build portfolios tailored to an investor’s specific goals, risk tolerance or tax situation, provided the underlying assets are actually available to buy and sell on digital rails.
“It’s sort of taking democratization to the next level.”
Toward Real-Time, Continuously Managed Portfolios
Ondo has signaled an even more automated version of this model is coming. John Hoffman, who joined Ondo in June to lead its portfolio products, said in an earlier interview that tokenization is following a path similar to the rise of ETFs, but moving considerably faster.
He described a vision of autonomous software continuously monitoring markets and allocating capital through professionally managed portfolios that adjust in real time as conditions change.
“Our end state will be portfolios that are professionally managed, real-time.”
Hoffman said reaching that state requires more than tokenized stocks and funds alone. It also requires a broader universe of assets on-chain, prime-brokerage infrastructure, and asset-management strategies that can actually be executed natively on blockchain networks rather than mirrored from traditional systems.
Stablecoins and Tokenized Assets as a Combined Foundation
Dan Romero, chief business officer at Stripe-backed blockchain Tempo, said in an interview that tokenization is following stablecoins’ disruption of payments by a few years, with a similar pattern playing out at a different layer of finance.
Stablecoins put cash on-chain; tokenization is now putting more of the broader investable universe on-chain alongside it, he said, and combining the two lets developers build financial products that were not previously possible.
“That same infrastructure is now going to be available with tokenized assets.”
Romero compared the dynamic to the earlier rise of specialized neobanks, where easier access to underlying financial infrastructure let companies build products tailored to specific customers rather than simply replicating a traditional bank’s offerings.
What the Partnership Signals for Tokenization’s Next Phase
The first phase of tokenization centered on moving individual assets, stocks, bonds and funds, onto blockchains one at a time.
The BlackRock-Ondo partnership suggests the next phase may focus on what becomes possible once enough of those assets already exist on-chain: combining them into portfolios that can be managed, rebalanced and moved between platforms more easily, and eventually tailored more closely to individual investors’ circumstances than today’s comparatively fixed menu of funds allows.
