Cutting-edge solutions secured for next-generation investors
In a continuing series looking at the victors in this year’s Scottish Financial Services Awards, run by Scottish Financial Enterprise, Gareth Edwards looks at the co-winner of this year’s Innovation award.
A new way to handle investments safely and securely online has been recognised with the Innovation prize at this year's Scottish Financial Services Awards.
While it might be one of Scotland’s older financial institutions, Baillie Gifford have shown they are continuing to look to the future with their award-winning product.
They were recognised for the launch of the Baillie Gifford Enhanced Yield Fund — the first publicly available, fully native UK-authorised tokenised fund, using public blockchains to drive operational efficiency and new possibilities for issuing, transferring and using fund shares.
Launched in June 2026, it followed an earlier pilot project in January 2025 which produced the UK’s first authorised tokenised fund as a proof of concept.
And it represents a step change in how regulated financial products are built, distributed and used - making it all the more notable that it was conceived, developed and launched from Scotland.
Alexandra Phillips, client relationship manager within the digital assets team at Bailie Gifford, said the fund at the heart of the product was fairly traditional - but designed specifically for a digital market.
“So the fund itself is a very straightforward traditional finance asset and then the infrastructure unlocks utility that isn't currently available to traditional institutional markets,” she said.
“If you distill it right back to basics, it's an actively managed short duration fixed income bond fund which is designed to offer a disciplined step out of cash.
“The underlying investment exposure itself is pretty familiar to us. It's publicly traded corporate and government bonds, both of which fall under an asset class that we have quite a lot of experience managing.
“The novelty here is the infrastructure that the fund is actually situated on. The fund is tokenized so that the ownership settlement and future utility of the fund can work more efficiently in an on-chain environment. And by on-chain I mean using blockchain technology, which ultimately should enable better features than currently exists in a traditional financial markets equivalent.
“So you're looking at enabling shorter settlement times, easier access, and moving closer towards a 24/7 utility environment.”
Unlike other tokenised funds on the market, the Bailie Gifford Enhanced Yield Fund is not a digital wrapper around existing infrastructure. Instead it is a fund issued onchain, with the blockchain serving as the register of record.
Tokens are issued directly as the investor’s holding in the Fund, with public blockchains used as the legal source of truth for ownership.
This ‘natively issued’ model - where the token is the fund holding, rather than a representation of exposure to it - is a first for the UK regulated fund market.
“There were already other tokenized funds that had been created, but most had a different structure, taking a conventional fund and then wrapping it,creating intermediaries between the fund and the fund holder,” Alexandra said.
“Where we tried to do things differently is the fund is a token itself. The fund is issued directly on the blockchain. So we are removing that layer of intermediation and that didn't come without its challenges.
“There's a lot of technical and regulatory considerations and the team worked very closely with the regulator and our tokenization partner BNY to ensure smooth delivery of this.”
The Fund operates on two major public blockchains, Ethereum and Solana, and supports minting and redemption using stablecoins (initially USDC) or fiat, with a minimum investment of $100.
By using public blockchains compliantly as part of a fund’s core architecture, Baillie Gifford is extending the standards investors expect from regulated investment funds into infrastructure designed for markets that operate continuously, transparently and programmatically.
The project has been in development for almost five years. BNY, the Investment Association and the FCA all collaborated closely with the Baillie Gifford team in the design and the fund, which also involved collaboration with the Ethereum and Solana ecosystems. The project sets a precedent not only for the UK but globally, demonstrating that a 118-year- old Scottish institution can pioneer the next generation of financial Infrastructure.
As BNY’s Global Head of Investor Solutions, Katey Neate, said, the launch is “a global blueprint for shaping how traditional financial assets can be issued, serviced and accessed through blockchain-enabled infrastructure.”
While the product may be innovative, Alexandra said that it had been created due to an identified market.
“Tokenization and digital assets won’t be a product for everyone, but at the same time there is an ecosystem that operates entirely onchain and this fund was designed purely out of the demand that we have seen from this onchain community,” she said.
“So you have this contingent of the market that is not currently being serviced by traditional finance because they don't want to come off digital rails. What we're doing is bringing a touch of that traditional finance, our reputation and our background to the onchain community.”
And she said winning the award for innovation was a great validation of the effort involved in creating such a unique product.
“Out reputation is one of a traditional business but actually we have always been very forward thinking, and certainly since I’ve been here we have alcove focussed on how technology will disrupt future industries, so it's only natural that we focused on how technology will change our own industry,” she said.
“The award meant a huge amount to us internally because such a great deal of work went on behind the scenes to get the fund off the ground.
“So, it's brilliant to see that recognized and to put a spotlight on a traditional institution like Baillie Gifford doing something so innovative.”