Securitize and Newberg launch tokenized high-yield fund

Securitize launched a tokenized fixed income fund with Neuberger to mainly invest in high-yield bonds, and issued shares on Avalanche, Ethereum, Solana and Sui

Summary

HINC will mainly invest in high-yield bonds, while also engaging in secured loan certificates (CLO) and leveraged loans.

Neuberger will participate in the tokenized fund for the first time as a deputy consultant.

Eligible qualified investors and qualified buyers can invest in the fund after completing necessary compliance reviews.

Securitize affiliates will be responsible for investment advisory, distribution, tokenization and fund management matters.

Securitize stated in an announcement issued on August 18 that the Neuberger Securitize high-yield tokenized Fund with the trading code HINC will seek risk-adjusted returns by investing in a portfolio of interest-bearing fixed income assets. In addition to high-yield bonds, the fund's investment scope also includes secured loan certificates and leveraged loans. Neuberger will manage the portfolio as a deputy adviser, and its fixed income business has assets under management of more than US$230 billion.

Securitize Capital LLC serves as investment adviser and Securitize Markets LLC will provide fund shares to eligible investors. Other related parties to the tokenization company will be responsible for administrative and operational services.

HINC introduces high-yield strategies into four blockchains

HINC will issue tokenized shares on Avalanche, Ethereum, Solana and Sui, providing eligible investors with access to the fund through these four networks.

Although fund shares are expressed on the public blockchain, participation will still be limited. Investors must qualify as a Qualified Investor or Qualified Buyer and complete Securitize's deposit process, including Know Your Customer (KYC) and Anti-Money Laundering (AML) reviews. Eligibility for entry also depends on the investor's location and applicable securities laws. Therefore, these tokens cannot be freely available to all wallet users like unrestricted cryptocurrencies.

Carlos Domingo, co-founder and CEO of Securitize, said the fund deploys Neuberger's fixed income capabilities on the public blockchain through the company's regulated infrastructure. "The launch of HINC on Avalanche, Ethereum, Solana and Sui allows eligible investors to invest through four leading blockchain networks."

Neuberger's role is limited to serving as a deputy adviser to the fund, while Securitize's entities retain other advisory, distribution and administrative responsibilities listed in the announcement.

For Neuberger, HINC is his first time serving as a deputy adviser to a tokenized fund. The asset management company will apply its own research and portfolio management processes to underlying fixed-income investments rather than managing blockchain infrastructure.

Neuberger will manage the underlying fixed income portfolio

According to company data as of June 30, Neuberger manages approximately US$613 billion in assets, covering stocks, fixed income, private markets, real estate and hedge fund portfolios, of which fixed-income platforms account for more than US$230 billion. Anil Abraham, head of product management at Neuberger, said that the company has built a fixed income business through experience in multiple market cycles and using research-driven and diversified strategies. "We are pleased to work with Securitize to extend our process-driven, proactive management strategy to qualified investors who want to obtain fixed-income strategies on-chain."

Tokenization has changed the way investors hold and trade fund shares, but announced investment authorizations still focus on traditional credit instruments. High-yield bonds usually refer to corporate bonds rated below investment grade, while leveraged loans are mostly issued by companies with higher debt levels. Secured loan certificates (CLOs) are another allowed part of HINC's investment portfolio, packaging corporate loans and layering their cash flow among different groups of investors. The announcement did not specify the specific allocation ratio of HINC to bonds, CLOs or leveraged loans.

In July this year, Centrfuge and New York Life Investment Management launched a tokenized U.S. high-yield corporate bond strategy, and similar institutional products entered the market. According to the fund's relevant report, subscriptions and redemptions of HYB products are settled in the USDC, while NYLIM is responsible for portfolio management and risk control. Unlike the single-chain arrangement described above, Securitize chose four networks when HINC was launched. The announcement did not specify whether subscriptions and redemptions would be settled in US dollars, stable coins or a combination of both.

Securitize expands its tokenized fund product line

As of April this year, Securitize reported more than US$4 billion in assets on its tokenized platform. The company also works with asset management companies such as Apollo, BlackRock, BNY, Hamilton Lane, KKR and VanEck. In early August, BlackRock launched two tokenized funds that hold cash, short-term U.S. Treasurys and Treasury-repo agreements. According to related reports, Securitize serves as the transfer agent and tokenization service provider for these products.

HINC is different from cash and treasury bonds because it invests in lower-rated corporate bonds and other credit assets. As a result, the fund's return characteristics and risk will depend on the performance of its underlying investment portfolio, rather than the blockchain used to record ownership.

Recent data also shows that the application of blockchain in traditional financial assets is increasing. A May report based on InvestaX data showed that as of the end of March, the tokenized real world asset (RWA) market excluding stablecoins was approximately US$29 billion, growing by approximately 30% in the first quarter.

In addition to third-party funds, Securitize also deployed its own public offerings on Solana and Avalanche when it began trading on the New York Stock Exchange in July this year. It was reported at the time that these tokenized SECZ shares represented the same common stock as exchange-listed securities, rather than a separate share class.

U.S. access remains limited by securities regulations

In the United States, Securitize Markets operates as a broker-dealer registered with the U.S. Securities and Exchange Commission (SEC) and runs an alternative trading system. Securitize Transfer Agent is also registered with the SEC, while Securitize Capital operates as an exempt reporting consultant. These entities each assume responsibilities related to HINC: Securitize Capital serves as fund adviser, Securitize Markets provides fund shares, and affiliated companies provide tokenization and administrative services.

The fund is only open to qualified investors and qualified buyers, so a qualification review is required before blockchain access. Potential investors must also pass KYC and AML screening and meet any restrictions related to their location. Outside the United States, Securitize operates through Securitize Europe Brokerage and Markets, an authorized investment company that runs trading and settlement systems under the EU Distributed Ledger Technology Pilot Mechanism.

Neuberger was founded in 1939 and is still privately owned and employment-owned. It has no parent company or unaffiliated external shareholders. The investment management company has approximately 3000 employees in 26 countries and manages investment portfolios for institutions, financial advisers and individual clients.