Boston Consulting Group (BCG) has made significant projections in the field of tokenization, previously estimating that the market for tokenized real-world assets (RWAs) could reach an impressive $16 trillion by 2030. In its latest whitepaper, produced in collaboration with Aptos Ascend and Invesco, BCG predicts that the tokenized fund sector may achieve a market size of $600 billion by 2030, assuming growth patterns akin to those observed in Exchange-Traded Funds (ETFs). Notably, ETFs captured 1% of the assets managed by mutual funds within just seven years.
The projected $600 billion figure represents an increase of $200 billion compared to earlier estimates for tokenized funds included in BCG’s $16 trillion forecast.
Market Potential: Crypto vs. Traditional Investors
BCG divides the potential market for tokenized funds into two segments: existing crypto investors and traditional investors. Current crypto investors alone could drive demand for tokenized funds of up to $290 billion. However, the more substantial demand, projected to be in the trillions, is expected to come from traditional financial institutions.
The whitepaper further asserts that tokenization could potentially enhance annual investment returns for mutual fund investors by $100 billion, but this outcome is contingent on the complete tokenization of all mutual funds. Based on BCG’s estimate that 1% of mutual fund assets will be tokenized by 2030, this translates to a potential uplift of $1 billion by that year.
Breakdown of the $100 Billion Gain
So, how does BCG arrive at the $100 billion figure? The analysis identifies several key contributors to this potential gain:
- Instant Settlement: Half of the estimated gain is attributed to instant settlement capabilities, which can unlock trapped capital.
- Efficiencies and Lower Fees: An estimated $33 billion could result from operational efficiencies that bring fees closer to those charged by ETFs.
- Easier Collateral Lending: The capacity for easier collateral lending, enabled by instant settlement, could generate an additional $12 billion in interest income.
In addition to the $100 billion figure, BCG highlights another potential “opportunistic” gain for sophisticated investors who capitalize on intraday net asset value (NAV) fluctuations. This opportunity could yield annual gains ranging from $80 billion to $400 billion.
Tokenization of Alternative Funds
In a related context, a study conducted by Bain & Co and JP Morgan late last year examined the possibilities of tokenizing alternative funds. They suggested that if high-net-worth individuals (HNWIs) were to increase their exposure to alternative investments, the sector could see an influx of up to $12 trillion in additional funds, potentially generating $400 billion in revenues. Asset managers would likely capture the majority of these revenues, with projections of $270 billion, while wealth managers could earn $100 billion and trading platforms $30 billion.
