The Future of Asset Management is Here, and its Name is Assetization

When we founded GenTwo, our goal was to disrupt the process of asset securitization. We wanted to remove barriers like high costs, complexity, and reliance on the fixed offerings of banks and specialists. This in turn would make it possible for more people – for example, smaller independent asset managers – to create more personalized financial products on a wider range of underlyings than had been possible before.  

While we were sure that securitization was ripe for disruption, as our co-founders describe in their book, over time we saw that the ramifications of what we were doing were larger than we originally imagined. It turned out that simplified securitization – what we call Assetization – has profound implications for the asset management industry, for institutional and private investors, and also potentially for society as a whole.  

Below we discuss why we think this is so. But first, let’s look at what Assetization is and how it works.

One box, limitless potential

To understand Assetization, it is often useful to compare it to containerization: the revolution in shipping and global trade precipitated by the introduction of the standard shipping container by Malcom McLean.  

Just as shipping containers provide a standard container for diverse goods, Assetization is about creating standard containers or "wrappers" for any asset.  

The most common wrapper we use is the Actively Managed Certificate or AMC, but other standard types of wrappers –  from Tracker Certificates to Credit Linked Notes (CLNs) all the way to cryptotokens – can be used as well.  

The important point is that, while the wrapper is standardized and can be issued in the form of a bankable security, its contents can be anything: any type of asset or investment strategy. This allows for easy integration into the existing financial system.

Creating products quickly and efficiently

Imagine being able to quickly and cost-effectively create bespoke investment products tailored to the specific needs and interests of individual clients or niche market segments. With Assetization, this becomes not just possible, but practical.  

Asset managers can expand their product shelves exponentially, offering everything from traditional securities to exotic alternative investments, all within the same standardized framework.  

Such flexibility makes it easier for managers to differentiate themselves in an increasingly competitive market. They can attract and retain clients who are seeking more than just off-the-shelf solutions. Lower production costs mean that even smaller, more specialized products become economically viable, further expanding the range of the products offered.  

This can help attract more assets and potentially improve margins, increasing the return on those assets.

Accessing non-bankable assets

The second major advantage of Assetization lies in its potential to unlock previously inaccessible investment opportunities.  

As our co-founders describe in the book mentioned above, wealthy individuals currently hold an estimated $78 trillion in non-bankable assets – things like real estate, ownership of private companies and passion assets like fine art or wine.  

Because they are non-bankable, these assets are not on managers’ books. That’s a missed opportunity for them. It can also be difficult for asset owners to monetize such assets if the need or desire arises. That is a missed opportunity for the individuals involved as well.

With Assetization we can unlock this enormous potential. By making non-bankable assets bankable financial intermediaries can expand the investment universe, offering innovative investment opportunities to their clients, allowing them to diversify their portfolios and potentially enhance returns.

Assetization also makes it easier for end investors to invest in their beliefs and convictions, something that clients increasingly demand. Managers who can support their clients in doing so will naturally have an advantage and stand to increase share of wallet.  

The future of asset management

We believe the advantages of Assetization are clear and compelling for banks and independent asset managers:

1. Expanded product shelves, offering a wider range of investment opportunities than ever before
2. The ability to win new assets by tapping into previously inaccessible markets
3. Clear differentiation from competitors through unique and personalized offerings
4. Reduced costs in product creation and management
5. The capability to meet growing client demand for personalized investment solutions
6. Access to vast new investment universes, including the $78 trillion non-bankable asset market

As we move into an era of increasingly sophisticated and demanding investors, Assetization provides the tools needed to meet those demands.