BlackRock offers a glimpse of how tokenization may change your investment portfolio

For most investors, building a portfolio still means either buying a collection of stocks, bonds and funds themselves or handing the job to an asset manager.

Tokenization may eventually blur that distinction.

BlackRock, the world’s largest asset manager, offered a glimpse of what that could look like with Ondo Finance via Intelligent Portfolios, packaging professionally constructed investment strategies into individual tokens on the blockchain.

The three portfolios, developed by BlackRock for Ondo, combine different assets into strategies focused on high income, diversified growth and high growth. Instead of buying and rebalancing the underlying investments separately, an investor can hold a single token representing the portfolio.

That may sound like a small change. After all, mutual funds and ETFs have bundled investments into single products for decades.

But putting the portfolio itself onchain potentially gives it characteristics that traditional structures don’t have. It can move between wallets and platforms, be visible onchain and potentially be used as collateral for borrowing or plugged into other financial products.

That starts to move tokenization beyond simply creating blockchain versions of individual stocks, bonds and funds.

Why this matters

Most of the tokenization boom so far has focused on individual assets: Treasury funds, private credit, stocks and ETFs.

The BlackRock-Ondo products point toward the next layer: combining those assets into investment strategies and putting the strategy itself onchain.

Crypto investment firm Pantera described that shift in a fresh report as moving “from single securities to onchain portfolios.”

“For investors, the practical change is a reduction in the number of positions and rebalancing decisions they need to manage themselves,” the firm’s analysts wrote.

There is a large existing business behind that idea. Model portfolios — pre-built combinations of funds and other investments used by wealth managers — held about $9.8 trillion in assets in June, according to Broadridge.

Tokenization could give asset managers another way to distribute those strategies.

BlackRock itself described the Ondo partnership in those terms.

“Tokenization creates new ways for portfolio strategies to be delivered through digital infrastructure,” Lisa O’Connor, BlackRock’s global head of model portfolio solutions, said in the announcement.

Others are already exploring similar ways to put entire investment strategies onchain.

Digital asset manager Bitwise introduced Automated Token Portfolios with Coinbase (COIN) and a16z-backed Glider in August, allowing eligible non-U.S. investors to follow Bitwise-designed portfolios of tokenized stocks while keeping the individual assets in their own wallets. Glider’s technology automatically adjusts the holdings to keep them aligned with the firm’s target weights.