The typical portfolio model is going to change, according to Jay Biancamano, managing director of digital product and development at custodial bank State Street. And that’s thanks to the digitization of assets.
On this week’s episode of The Scoop, Biancamano said that the ability to tokenize assets would allow investors to more easily include more illiquid assets into investor portfolios. Those assets could include real estate, intellectual property and non-traditional assets like art.
“That conversation has shifted and resulted in more inbound calls from issuers looking to provide these assets to our clients, however clients are still skeptical,” he said. “It is a little clunky or cumbersome to trade them, and not as seamless as our clients are used to.”
Biancamano said portfolios will begin to look distinctly different as soon as five years from now. Currently, he said most model their portfolios with equity, bonds and cash. Over time, this could shift to hold assets like real estate, art and intellectual property.
“If you’re at the forefront of that, you could figure out ways to provide new products, new services around that,” he said.
The security token industry has explored possibilities in tokenizing traditionally illiquid assets, fractionalizing value for investors. Vertalo and Wave recently discussed possibilities of tokenizing assets like racehorses, art and whiskey barrel futures.