London-based asset manager Schroders is giving investors access to its emerging markets bond fund through Solana. The firm announced the project on Wednesday, November 4, in partnership with tokenization platform Centrifuge. Centrifuge lists a minimum investment of $100,000 for SISF, Schroders’ first product on Solana.
Schroders managed about $1.1 trillion in assets at the end of June and has invested in emerging markets debt for more than 50 years. Its team of more than 40 investment professionals covers bonds issued by governments and companies across emerging economies.
What does the Solana token represent?
Investors who buy the SISF token hold shares in a feeder fund that invests in Schroders’ emerging markets bond fund. Solana records ownership of the feeder fund shares. The underlying Schroders fund holds the bonds in its portfolio.
This structure determines how changes in bond prices affect the token’s value. As the bonds in the underlying portfolio gain or lose value, those changes feed through to the feeder fund’s net asset value and, in turn, to the value of each investor’s shares. Centrifuge provides the infrastructure to issue and manage those shares on Solana.
According to Centrifuge, SISF held roughly $200,000 in assets at the time of writing. That figure reflects the size of the product available on Solana. The $1.1 trillion figure covers the assets Schroders manages across all its investment strategies.
Credit and currency risks shape bond returns
Short-term U.S. Treasuries and money market funds dominated the early years of tokenization. At the time of writing, these products accounted for about $14 billion of the $39 billion tokenized real-world asset market, according to RWA.xyz. That puts their combined share at just over one-third of the market.
Economic conditions across several countries influence returns on Schroders’ strategy. A corporate bond, for example, can lose value if investors grow concerned about the issuer’s ability to repay its debt. Exchange rate movements can also affect portfolio returns.
Anil Sood, chief strategy and growth officer at Centrifuge, said emerging markets bonds offer onchain investors a different risk and return profile from short-term government securities.
Schroders started with a money market fund
The Solana project marks Schroders’ second major step into tokenization. In August, the Central Bank of Ireland approved a tokenized share class for one of the firm’s U.S. dollar money market funds. Schroders worked with JPMorgan’s Kinexys platform on the share class, called Schroders Onchain Active Returns (SOAR).
Centrifuge’s product lineup shows the range of bond strategies asset managers are bringing onchain. New York Life’s investment management arm offers a fund focused on U.S. high-yield corporate bonds through the platform. Schroders uses the same infrastructure to give investors access to government and corporate debt across emerging markets.
