The development of this "fractional" model draws from distributed ledger technology, aka blockchain, which allows a wider pool of investors to get a seat at the table traditionally reserved for large institutions and UHNW individuals.

Digital securities exchange ADDX, which recently partnered with US investment platform Hamilton Lane, has launched a new institutional service enabling wealth managers to introduce their clients to private investments.

Corporate treasuries and family offices can also take part in the space via a corporate service to diversify their portfolios through private market products, Asia-based ADDX said in a statement yesterday. 

The new product line, ADDX Advantage, has already won business from StashAway, the Southeast Asian digital wealth manager, and CGS-CIMB, a securities broker in Asia.

The service enables clients to have fractional access to private market products – traditionally an area cordoned off for big institutions and ultra-high net worth clients. Fractional ownership models use digital ledger technology, most commonly known as blockchain, to give people a stake in these asset classes for a fraction of the traditional amounts – hence the term. The development of these platforms highlights how digital technology is reshaping the wealth management value chain.

Under the ADDX model, investors can secure investment opportunities to a minimum of $10,000, far below the $250,000 to $5 million sums typically required when going direct to private market issuers.

“The lower barrier to entry makes it possible for end clients to manage risk by spreading their capital across a variety of products,” ADDX said. 

“Depending on the regulatory licences the wealth managers hold, they can choose between two types of institutional services. They can either execute trades and perform fund transfers on behalf of end investors, or create sub-accounts in their end clients’ names and allow the clients to take control of their own activity on ADDX,” it continued. 

In late March, US-listed private markets investment firm Hamilton Lane partnered with ADDX to tokenize a class of shares issued by one of its funds. Tokenization is often spoken about in the alternative assets space as a way of widening access to investors who aren’t ultra-wealthy or part of large institutions. Tokenization is an important trend and comes in two main forms – tokenization of established assets such as private equity or venture capital, for “non-bankable assets” such as fine art. The wealth sector is increasingly considering tokens and other digital assets as an alternative form of investment.