• This article explains what assetization is and why it is important for all parties involved in the process.
• The information is aimed at asset managers, investors, and asset owners seeking to build strategies with high liquidity.
• FlexFunds offers an asset securitization program to enhance the liquidity of multiple financial assets. For more information, feel free to contact our experts.

Modern finance is not only characterized by being highly digitalized but also by having sophisticated processes that allow investing in dozens of assets. One of the most popular is assetization, which converts non-bankable assets into investable financial instruments.

What is assetization?

It is a process by which items can be transformed into liquid, tradable, and fractionalizable assets. These may be tangible objects, such as works of art, or intangible rights, such as product patents, among many others.

From unproductive assets to global investment opportunities

Assetization originated from science and technology studies, which analyze how social, political, and economic factors influence the development of these areas, as well as the implications they generate within those contexts.

However, its recent expansion as a tangible phenomenon responds to two major contemporary catalysts:

• The first is financial in nature. After the 2008 global crisis, quantitative easing policies and near-zero interest rates drastically reduced the profitability of sovereign bonds. In this scenario, the abundance of capital fueled the search for alternatives with higher returns, paving the way for new asset classes.
• The second is technological. The emergence of blockchain and tokenization provided unprecedented tools for transforming goods and rights into liquid, tradable financial assets.

A paradigmatic example of this trend was the rise of non-fungible tokens (NFTs), which illustrated the potential of these technologies to redefine how assets are represented and traded in the digital economy.

Fundamentals of assetization: The key process

The particularity of assetization is that it can be carried out in different ways, but through a very similar process in all cases.

Asset identification

The first step in assetization is identifying the asset or group of assets to be converted into a bankable asset. Asset managers, in dialogue with their clients, must determine whether they seek to securitize works of art, patents, data, real estate, etc. The key lies in selecting assets that can appreciate and/or generate a cash flow over time.

Structuring

Next, the selected assets are converted into investable assets through a structuring process. In this phase, the parties involved must determine whether they want to convert the assets through tokenization (blockchain) or securitization (special purpose vehicle).

In the case of FlexFunds, a leading company in asset securitization, a special purpose vehicle (SPV) based in Ireland is used to develop exchange-traded products (ETPs).

FlexFunds’ service enables the launch of listed securities with their own ISIN/CUSIP codes and covers fund accounting, NAV calculation, corporate administration, and back office.

Issuance and distribution

The final step in the assetization process is issuance and distribution. The asset that was previously non-bankable is now tradable as a liquid financial asset. Therefore, asset managers can distribute highly liquid or illiquid strategies across various conventional brokerage accounts.

Benefits of assetization for investors and asset owners

Assetization offers clear benefits for both investors and asset owners.

Advantages for investors

Investors can access a wide range of assets with growth potential and diversification capacity without fearing liquidity issues. They can invest in works of art, patents, real estate, closed-end funds, royalties, and much more as if they were stocks or bonds.

Advantages for owners

Through assetization, owners can monetize their tangible or intangible properties and generate a cash flow without disposing of the assets themselves.

The impact on financial inclusion

Historically, the issuance of investment instruments was reserved almost exclusively for specialized institutions, particularly when dealing with complex or unconventional assets.

Traditional mechanisms—such as the creation of investment funds or limited partnerships—required significant capital investments, advanced technical knowledge, and strict regulatory compliance, limiting access to a small group of participants.

Nevertheless, assetization arrived to change the rules. By simplifying and standardizing structuring processes, smaller managers, family offices, and even individual owners can transform their assets or strategies into investable vehicles.

In this way, they can offer them to a broader range of investors without the administrative and regulatory burdens typical of conventional methods.

The future of alternative markets through assetization

Alternative markets—made up of works of art, patents, private equity, hedge funds, etc.—are increasingly popular due to their potential to generate attractive returns and enhance diversification.

However, the main drawback is their illiquidity. To enter and exit these asset groups, investors and managers must pay a high price, both financially (fees and spreads) and in terms of time (operations are not instantaneous).

Fortunately, thanks to assetization—which eliminates the drawbacks of illiquidity, and distribution—alternative markets could experience accelerated expansion and reach a wider variety of investors and managers.

To learn more about FlexFunds and our asset securitization process, you may contact our team of experts. We will be glad to assist you!

Sources:

• https://journals.sagepub.com/doi/full/10.1177/20438206231157913
• https://www.vestr.com/blog-posts/assetization
• https://www.gentwo.com/assetization/
• https://www.forbes.at/artikel/assetization