We have refreshed the Morningstar Medalist Rating methodology to improve transparency, consistency, and comparability across funds. The Medalist Rating is Morningstar’s forward-looking assessment of funds, helping investors identify those expected to outperform within a category. Changes under the new methodology offer a fresh read on which funds stand out and which may be worth reconsidering.

Under the updated approach, ratings are now assessed on a category-relative basis, and funds are no longer graded on a forced distribution curve. Previously, this curve limited the number of Gold-, Silver-, and Bronze-rated funds within each category. It has been replaced by fixed thresholds, which will also help to create a more stable set of ratings.

A key enhancement is the introduction of a dedicated Price Score. Previously, fees were incorporated by deducting them directly from a fund’s pre-fee score. To improve clarity, we now assign an explicit Medalist Rating Price Score, which ranges from negative 2.5 to positive 2.5 based on a fund’s fee percentile within its category. Our recent research, [The Enduring Predictive Power of Fees](https://www.morningstar.com/en-hk/business/insights/research/asia-predictive-power-of-fees) in Asia, reinforces that fees remain one of the strongest predictors of a fund’s future success, and this new measure helps reflect that relationship in a more transparent way.

Importantly, the core of our assessment remains unchanged. We continue to evaluate funds based on three fundamental pillars: People, Process, and Parent.

We have implemented the updated methodology across all rated funds at once, so current ratings already reflect the new approach. For more details, please refer to our [column](https://www.morningstar.com/funds/why-are-we-updating-our-medalist-rating-simpler-is-better) that talks about the impact of the changes.

**Impact on Funds’ Medalist Ratings**

Where rating changes have occurred under the updated methodology, they have typically been limited to a one-notch movement. Meanwhile, at an aggregate level, the changes have resulted in more Gold and Silver ratings, and fewer Bronze, Neutral, and Negative ratings.

Looking at the impact by Morningstar Category, some categories were more affected than others, reflecting the shift toward category-relative assessments and the varying influence of fees. A notable example is the US large-cap category, where the relatively low alpha potential previously constrained active funds’ ability to achieve higher ratings. Under the new methodology, some funds with strong fundamentals and reasonable fees are seeing upgrades. Allocation funds are another category with a relatively higher number of upgrades, with the newly introduced Medalist Rating Price Score helping to better capture the fee relativities within a given Morningstar Category.

In identifying funds that saw rating changes (Exhibit 1), we focused on analyst-rated strategies across core asset classes that Asia-based investors commonly consider when building their portfolios. These include categories such as US Large-Cap Blend Equity, Asia ex-Japan Equity, Global Diversified Bond, and Asia Bond. To ensure relevance, we included only retail share classes available for sale in at least one of the region’s three major markets: Hong Kong, Singapore, and Taiwan.

**Exhibit:1  Funds (Retail Share Classes) in Asia That Saw Medalist Rating Changes**

![Screenshot 2026-05-25 140318.png](/uploads/Screenshot_2026_05_25_140318_1ad08d1368.png)

We take a closer look at a few prominent funds to highlight whether their retail share class saw a rating change and the key drivers behind these moves.

BGF Asian Tiger Bond: The fund draws on strong research resources and a team with a clear focus on identifying value across Asian bond markets. These strengths merit Above Average scores for both the People and Process pillars. Combined with the retail share class’s reasonable pricing, which sits in the middle quintile of the category, this supports a Medalist upgrade to Bronze. Meanwhile, several lower-cost share classes saw more pronounced upgrades, with the cheapest institutional share class moving from Bronze to Gold.

BGF Global Allocation: Under the previous methodology, allocation funds often found it difficult to achieve Gold, Silver, or Bronze ratings due to the challenges these strategies faced in outperforming their category benchmarks after accounting for their relatively higher costs. Under the new approach where fees are considered on a peer-relative basis, the underlying strengths of many of these funds shine through more clearly, resulting in a higher number of upgrades across the category. Few global balanced funds match the BGF Global Allocation in terms of disciplined risk oversight, strategic thinking, and depth of resources. These strengths help the fund stand out in the category and support a one-notch upgrade to Bronze for its A2 retail share class.

BGF Global Multi-Asset Income: The strategy has witnessed some recent leadership turnover and uneven team depth across its underlying investment sleeves, which tempers our conviction in this multi-asset, income-oriented strategy. Furthermore, the A2 retail share class’s high fees, which sit in the second-most-expensive quintile within an already pricey category with a median fee of 1.5% per year, continue to hold back its rating at Neutral under the new methodology. On the other hand, the more reasonably priced D2 and D6 share classes, which sit in the cheapest quintile among peers, saw a significant boost to their ratings, moving from Neutral to Silver.

Capital Group New Perspective Fund: The strategy boasts an accomplished management roster and a deep global analyst bench, combined with a proven investment approach. These fundamental strengths shine through, resulting in a one-notch upgrade for its B share class to Bronze.

Morgan Stanley Global Opportunity: This popular global large-cap growth offering is led by an excellent manager who employs a highly distinctive approach. While the strategy boasts many strengths, the high fees of its A retail share class, which sits in the most expensive quintile of its category, keep its rating at Neutral. That said, the strategy’s lower-cost I share class, which sits in the second-cheapest quintile, received a one-notch higher rating of Bronze.

Pimco GIS Income Fund: This fund behemoth is run by Dan Ivascyn, who manages this aggressive, wide-ranging strategy with many levers at his disposal to produce an appealing yield, resulting in a High People score and Above Average Process rating. However, the E retail share class does not see a change from its Bronze rating. The share class sits in the most expensive quintile versus peers, which holds it back from achieving a higher rating. Meanwhile, the strategy’s cheaper Institutional share class received a one-notch increase from Silver to Gold. This is notable given the increasing availability of these lower-cost share classes on certain fund distribution platforms in Asia.


Which Funds in Asia Saw Rating Changes?

The United States has moved to restrict foreign-made humanoid and quadruped robots from China, a decision that we think will hit individual companies with heavy American exposure far harder than it will slow the broader growth of China’s robotics sector.

![Screenshot 2026-08-25 135022.png](/uploads/Screenshot_2026_08_25_135022_3062a6ae22.png)

**Modest but Real Export Volumes**

Chinese Customs data offer one of the few concrete proxies for how many robots have reached American shores. Under HS code 84798970, China exported 10,400 units worth RMB717.7 million in the first half of 2026. Of those, 1,840 units worth US$23.3 million went to the United States — about 18% of total export volume, enough to make the US a meaningful destination for Chinese robotics exports.

The figures come with an important caveat: HS 84798970 is a broad customs category that covers machinery and mechanical appliances well beyond humanoid and quadruped robots. We believe the 1,840-unit figure should be read as an indication of the overall scale of China’s robotics-related exports, not as an exact count of the robots covered by the US restriction.

At the company level, Unitree is regarded as a significant Chinese exporter to the US among humanoid and quadruped manufacturers, with products sold widely to international customers including American universities and research users. AgiBot is another notable exporter, and UBTECH remains an important Chinese humanoid manufacturer, though less public information exists on the geographic breakdown of its shipments. US import records have specifically documented AgiBot’s humanoid and quadruped platforms entering the country, confirming that Chinese-made advanced robots are already circulating in the American market.

**A Meaningful Revenue Stream — For Some**

For a handful of companies, US sales already represent a meaningful revenue stream, though not for the Chinese robotics industry as a whole. Unitree is the clearest example: the company generated roughly RMB1.7 billion in revenue in 2025, with more than 40% coming from overseas markets. The US alone accounted for up to about 18% of revenue, according to data from the company’s recent IPO materials.

That makes the US a meaningful market for Unitree, and losing access could noticeably affect its revenue growth — particularly because the company has been among the most successful Chinese firms at selling relatively low-cost robots overseas. However, we don’t think we should extrapolate Unitree’s US exposure across the industry, however. Many Chinese robotics companies remain overwhelmingly focused on the domestic market, which is itself large and growing rapidly. Customs data reinforce the point: even within the broader HS 84798979 category, the US represented only around 18% of China’s export volume in the first half of 2026, leaving a substantial non-US market.

**FCC Action Raises the Stakes for US-Focused Firms**

The US Federal Communications Commission’s decision adds new foreign-made humanoid and quadruped robots to its Covered List, meaning new models generally cannot obtain the FCC authorization required to be marketed or sold in the country. The immediate impact will fall hardest on companies that have already built out US distribution channels — Unitree being the clearest case, given that the US can represent a high-teens share of its revenue.

We think there are two reasons the impact could run deeper than the direct revenue loss suggests. First, the US is an important technology and research market: Chinese companies have sold robots to American universities, laboratories and companies that provide not just revenue but application feedback and opportunities to refine products in a sophisticated market. Second, the restriction arrives just as humanoid robotics enters a critical commercialization phase, and losing a large developed-market customer base could slow international commercialization and narrow the range of applications in which Chinese robots are deployed.

Even so, the sector-wide impact is expected to be far smaller than the hit to individual companies. China’s domestic market is already enormous, and Chinese manufacturers hold a substantial lead in shipment volumes. Omdia estimates Chinese companies accounted for the vast majority of the roughly 13,000 humanoid robots shipped globally in 2025, with AgiBot, Unitree and UBTECH among the leading suppliers. Rather than fundamentally altering the trajectory of China’s robotics industry, the ban is more likely to redirect growth from the US toward China and other overseas markets.

**Chinese Firms Weigh Their Response**

Chinese robotics companies have several straightforward strategies available to offset the setback. The first is to accelerate growth outside the US. China itself is the most obvious alternative: domestic humanoid shipments were already estimated at around 18,000 units in 2025 and are expected to rise substantially in 2026. Companies can also target Europe, Southeast Asia, the Middle East and other markets with currently lighter regulatory barriers — a path particularly feasible for firms such as Unitree that already have international distribution networks.

A second strategy is deeper localization overseas. Over time, Chinese robotics companies could establish local assembly, manufacturing, R&D or distribution operations in non-US markets, easing compliance with local rules and reducing reliance on direct exports from China. We think, however, that simply assembling a Chinese-designed robot abroad would not necessarily circumvent the US restriction if the policy targets the origin and underlying technology of the robotic system — meaningful localization would require a much deeper restructuring of the supply chain.

Third — and perhaps most important — companies can lean further into China’s domestic commercial market. The next phase of the industry is less about demonstrating that a robot can walk and more about proving it can perform economically useful work, and China’s vast manufacturing base offers ample opportunity to test robots in logistics, automotive, electronics, warehousing and other applications.

Finally, Chinese companies can keep strengthening their vertically integrated supply chains. China already has strong capabilities in motors, batteries, actuators, sensors, precision machinery and electronics — an advantage in cost and production scale that could help offset the loss of some Western markets.

**China Leads in Scale, US Leads in Intelligence**

Broadly, China currently holds a clear advantage in robotics manufacturing scale, hardware supply chains and early commercialization, while the US retains significant strengths in AI, software, computing and venture capital. The gap is especially visible in humanoids: Chinese companies dominated global shipments in 2025, with AgiBot shipping more than 5,100 units, Unitree around 5,500 and UBTECH about 1,000, according to industry data.

That gives Chinese companies an important edge, since robotics is ultimately a hardware-and-manufacturing business as well as an AI business — and China already has the EV, electronics and industrial-automation supply chains needed to produce large numbers of robots and components at relatively low cost. The US, by contrast, leans on a different set of strengths: companies such as Tesla and Figure AI have strong capabilities in AI, foundation models, computing and software, keeping the US highly competitive in the intelligence layer of robotics even as China leads in physical production volume.

We would not equate shipment volume with technological leadership. Humanoid robotics remains at an early stage, and a significant share of current shipments are going into research, demonstrations and pilot projects rather than mature commercial applications. The real competitive test will be whether companies — Chinese or American — can achieve reliable performance and attractive returns on investment in large-scale industrial and commercial deployments.


US Blacklists Chinese Humanoid Robots, But Impact Seen as Uneven Across Industry

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![Picture1.jpg](/uploads/Picture1_ad7cd19324.jpg)


# Create a visual map of your financial future

Are you saving money without a clear purpose? And putting off investing because you don’t know where to start?

•	**Give meaning** to your investments by connecting them to your life goals.

•	**Break down your journey** into clear, manageable steps.

•	**Make decisions** that align with what matters to you.

Ready to take the first step?

**[Define your goals](https://www.amundi.com.sg/retail/new-investing-start-here-step-step-guide)**
 
# Wondering which investments actually match your goals?

With countless investment options available, choosing the **right** ones can feel challenging. Investment decisions deserve careful thought.

We cut through the complexity and help you **match investments** to your goals.

Let's clear the path to your investment decisions.
 
# Understand the risk-return connection

![image1.jpg](/uploads/image1_fc61fa6d81.jpg)
 
# Factor timelines in your decision

Your investment horizon significantly influences which solutions make sense for you:

![long-terms-shorts-term.png](/uploads/long_terms_shorts_term_1449ede84d.png)

### Diversify your investments

![image2.jpg](/uploads/image2_f259f8c12e.jpg)
 
# Evaluate different options

There are many options for how you can best build your portfolio:

![different-funds.png](/uploads/different_funds_fd7e1701a3.png)


# From Knowledge to Action

Investment knowledge is your foundation, but action is what builds your future.

These key principles help you better understand your options and have productive conversations with your financial advisor. Today's choices build tomorrow's success.

 

##### Important and Legal Information
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This document is for information purposes only, is not a recommendation, financial analysis or an investment advice and does not constitute a solicitation, invitation or offer to purchase or sell any product. The information contained in this document is intended for general circulation without taking into account the specific investment objectives, financial situation or particular needs of any particular person. 

The information contained in this document is as at February 2025 except where otherwise stated. The information contained in this document has been obtained from sources believed to be reliable but has not been independently verified, although Amundi and its affiliated companies (collectively “Amundi”) believe it to be fair and not misleading. Opinions expressed in this document are subject to change without notice. Amundi does not accept liability whatsoever whether direct or indirect that may arise from the use of information contained in this document. Amundi and its associates, directors, connected parties and/or employees may from time to time have interests and/or underwriting commitments in the securities mentioned in this document.

**Past performance and any forecasts made are not necessarily indicative of the future results**. Any forecast, projection or target is indicative only and is not guaranteed in any way. All investments involve risks and the amount received from such investments may be less than the original invested amount. Amundi does not guarantee that all risks associated to the securities mentioned herein have been identified, nor does it provide advice as to whether you should enter into any transaction.

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**This document has not been reviewed by the Monetary Authority of Singapore.**

How can Goal-Based Investing help you with retirement?

How To Build Wealth ft. Earn Your Leisure

The rapid rise of semiliquid funds has brought both strong interest and heightened scrutiny. Much of the concern reflects how quickly the segment has grown (Exhibit 1), particularly among retail investors who are more accustomed to daily liquidity in traditional mutual funds. This is less a case of a fundamentally flawed structure and more a relatively new product that is still being understood.

![Screenshot 2026-07-23 101759.png](/uploads/Screenshot_2026_07_23_101759_68027d9c74.png)

At the same time, a degree of scrutiny is both expected and appropriate. Semiliquid funds are built around a core trade-off, offering access to inherently illiquid assets while providing periodic liquidity. As our paper Demystifying Semiliquid Fund Structure – an APAC Perspective outlines, there is no free lunch. Balancing the trade-off between liquidity and returns is easier said than done, and many of these structures have not yet been tested through a full market cycle.

Several Key Concerns Stand Out 

First is investor familiarity and expectations. Many of the risks are not new, but they are less familiar in a retail context, creating a gap between what investors expect and how these funds behave in practice. Liquidity mismatch is central, with redemption features layered over assets that cannot be easily sold. This becomes more visible in stressed conditions, when gating or limits may apply.

Fees are another area of focus. These funds often come with higher and more complex fee structures, raising questions around value for money. According to Morningstar’s recent study, the average annual report net expense ratio (adjusted for borrowing costs) for semiliquid funds was just over 3%. Transparency is also a key issue. Valuations are frequently model-based and updated less often, reducing visibility into underlying asset values. In addition, product design can vary widely. Some strategies may hold larger liquid allocations while still charging private market fees, potentially diluting expected exposure.

More broadly, transparency gaps extend beyond valuation. Morningstar has always advocated for clearer and more consistent disclosure on portfolio holdings, portfolio manager responsibilities and track records, as well as performance objectives and benchmarks. Without this level of visibility, it becomes difficult for investors to assess what they own and how these strategies are being managed.
Regulatory Developments in Hong Kong and Singapore 

From a regulatory perspective, markets such as Hong Kong and Singapore are taking a measured and deliberate approach to expanding retail access. Rather than opening access broadly, safeguards are embedded directly into product structures. Redemption limits, gating, and notice periods are designed to prevent forced selling and protect investors, helping align liquidity features with the nature of private assets.

This approach is reflected in how access is being implemented. Singapore’s Long-Term Investment Fund framework introduces purpose-built structures with defined safeguards, while Hong Kong is expanding access more incrementally within its existing regime. Both point to a controlled opening, where broader participation is paired with clear guardrails.

There is also an opportunity to further strengthen transparency and disclosure. Valuation practices can vary, fee structures can be complex, and disclosure remains uneven across products. The next phase should focus on greater consistency through stronger and more standardized disclosure, increased use of independent valuation, and clearer governance frameworks.

At the same time, the broader trend toward expanding retail access to private markets remains intact. The convergence between public and private markets is a structural shift, and investor demand continues to grow. The semiliquid fund market itself is approaching $600 billion in assets, more than doubling since 2022, underscoring the scale and momentum of this segment.

Recent headlines around gating and redemption constraints in the US have made some investors more cautious. Rather than signaling a reversal, this reflects a shift from early enthusiasm to closer scrutiny of how well the structure performs in practice.

Building Trust Will Take Time 

It requires better investor education, improved transparency, and consistent outcomes across market cycles. Trust is particularly important in this segment, where product complexity, limited liquidity, and less frequent valuation mean investors need greater confidence in both the structure and the manager to enable broader and more sustainable adoption.

Ultimately, success will depend not just on expanding access, but on building trust, ensuring investors understand what they are buying, and delivering outcomes that align with their expectations.



Semiliquid Funds: Growth, Growing Pains, and What Comes Next

How Digital Transformation is Unlocking the Next Phase of Asia’s ETF Growth**
 
Exchange traded funds (ETFs) were pioneered in North America followed by expansion in Europe, but Asia has been catching up fast. ETF growth rates across multiple markets in the region over the last few years has been unprecedented. This growth both in terms of scale 
and complexity is challenging the legacy operating models and driving the need for a more seamless and agile end-to-end operating model to support the broader ETF ecosystem.   

To capitalise on the region's ETF boom and manage what are increasingly complex products, the sector is moving beyond the fragmented and manual middle/back-office processes that cramp the market’s rapid expansion and is now adopting automated, end-toend digital platforms that can scale without friction.  

**Retail winds fanning Asian markets**
 
Asia is the fastest-growing ETF market in the world. ETF assets in Asia-Pacific closed 2025 with a combined value of USD2.43 trillion and flows rising 42% over the year.

In Hong Kong, average daily turnover doubled in the first nine months of 2025 to USD4.8 billion while in Singapore, total ETF assets under management surged 67% in the first half of 2025 to SGD14.3 billion (USD11.2 billion), with gold and sustainability-based ETFs seeing notable demand. In Taiwan, the ETF boom continued through 2025, with the number of cumulative beneficiary accounts rising by 20% year-on-year to over 14 million and total listed assets grew by 36% to NTD4.63 trillion (USD147 billion).
 
What explains the boom? The appeal of ETFs in Asia is much the same as it is globally. Costs and fees are lower than those of actively managed mutual funds. ETFs are richly thematic, and – particularly important to younger generations used to buying things with a 
few swipes on a phone – they are easily accessible, being traded on secondary markets.
  
These advantages are prompting even active funds to create ETF wrappers for their products, and these are proving particularly popular in Asia, outpacing the growth of passive  ETFs over the past decade.
  
**The scene behind the scenes** 
The rapid expansion of Asia’s ETF market has however generated intense competition and pressure behind the scenes. Asset managers face significant margin compression as the returns between active and passive products converge.  

Additionally, the popularity of gold and Bitcoin ETFs has seen funds racing to discover the next trending theme, with a corresponding rise in increasingly complex synthetic products.  

Fund managers are also seeking to tap pools of demand not only in Asia’s mature financial markets but in emerging hotspots like India, Indonesia, Malaysia, Thailand and Vietnam. The licensing and regulatory requirements of catering to so many diverse Asian markets add to the complexity.
  
The result is that the earlier adopted operating models, systems and tools deployed in the ETF space now find that legacy systems are too disjointed to scale up painlessly. Many Participant Dealers (PDs) in the region still resort to email and even faxes to place ETF 
creation and redemption orders and the subsequent lifecycle of these orders has also relied on cumbersome processes across ETF issuers and service providers.    

Manual interventions are bottlenecks that carry risks compounded by the complex string of counterparties needed to make ETFs work. With traditional funds, an investor can go to a fund house or its Transfer Agent and buy units on the primary market. While ETFs are easily accessible by investors, the order lifecycle is longer and more complex involving the issuer, PDs, custodian banks, trustees, market makers and stock exchanges.  

Friction arises not just from errors but from delays. Slippage costs occur when market movements result in the price at which a trade is executed differing from the price initially expected. Amidst highly volatile markets and more and more jurisdictions moving to shorter 
settlement cycles, eliminating manual delays that can incur such costs becomes ever more essential to competitiveness, given such costs scale with rising volumes.  

**Digital agility for supple scaling**
 
Through developing an end-to-end digital platform that allows for straight-through processing, banks like Standard Chartered can eliminate the manual stretch-points that are placing so much pressure on fund managers, PDs and other upstream participants.  

Standard Chartered has established a digital end-to-end ETF servicing solution that is fully integrated with its core infrastructure providing custody, fund administration and transfer agency services. It is designed to streamline and future-proof the order processing from start to end, creating a foundation that allows clients to navigate rapid industry changes while 
scaling their businesses efficiently.
  
“We are supporting our clients with solutions that are digital-first and truly scalable, so they can keep growing rapidly as the market landscape changes around them.” Ying Ying Tan, Global Head of Product, Financing & Securities Services at Standard Chartered.
  
By putting in place a solution with rich features and workflows that works with various types of ETFs in different markets, Standard Chartered’s aim is to foster end-to-end assurance that allows leaders to focus on building the next generation of ETFs, without being held back by day-to-day functionality issues. This digital transformation marks a turning point for Asia’s ETF ecosystem, unlocking new efficiencies and strengthening its standing in the global ETF market.

How Digital Transformation is Unlocking the Next Phase of Asia's ETF Growth

The growth of decentralised finance (DeFi) has been one of the financial stories of the decade. Total value locked on blockchain – that is, the dollar amount of assets staked on blockchains or related applications – peaked at $237bn last year, up from a few hundred million in 2020. Stablecoin transaction volumes hit $33tn in 2025, exceeding the combined throughput of Visa and Mastercard. Tether, the largest stablecoin issuer, now holds more US Treasury bills ($141bn) than Germany, the UAE, and Australia.

With that scale has come a familiar corporate problem: how to manage a large balance sheet. DeFi treasuries want what any treasury wants – safety, liquidity, and yield – but most are still relying on traditional money market funds or bank deposits to get it. The opportunity for asset managers to serve that demand is clear, and in doing so to reach untapped investor cohorts in the DeFi space, an entirely new pipeline of customer acquisition. But to connect with this market they must first become compatible with it, offering products that can be traded and held on blockchain – tokenised versions of their traditional funds.

To understand how the industry is approaching this, last year we commissioned ValueExchange to survey 52 asset managers and seven DeFi/Web3 platforms on the state of tokenised fund distribution. We wanted to know how asset managers are approaching the opportunity, which products they are bringing to market first, which distribution partners they favour, and where the practical barriers lie, and we wanted to test the demand side, examining how DeFi platforms think about tokenised funds and what they expect them to unlock. 

In this piece, we look at what the research tells us about the global picture, and then zoom in on Asia-Pacific, where the shape of the opportunity, and the barriers to realising it, differ.

While demand from DeFi platforms is a key driver of this shift, the same distribution model is also being adopted across regulated digital platforms and wealth channels, particularly in Asia’s leading financial centres.

**Distribution as the entry point**

The immediate opportunity for asset managers is in the distribution of tokenised funds. Rather than undertaking end-to-end tokenisation, which would involve digitising the entire value chain, asset managers are tokenising only the fund unit, leaving the underlying structure intact. This allows them to reach new investor cohorts quickly, often without creating new share classes, and with minimal changes to existing infrastructure.

Most asset managers are already putting tokenisation into practice. According to our research, almost three quarters have reached the point where they have at least put a tokenised project in motion, and among those who have already launched a tokenised fund, 65% report that the experience offers benefits over the traditional model, with access to new customers and automation among the most commonly cited advantages. 

![Cala1.png](/uploads/Cala1_56c4669eed.png)

The share of asset managers distributing tokenised funds is set to reach 13% this year and 28% by 2030. Our research projects the AUM of tokenised funds will grow from $4bn in 2024 to $235bn by 2029, a 58x increase. Other estimates have been even more bullish: a PwC report earlier this year projects $715bn by 2030. Tokenised money market fund AUM alone grew from $4bn at the start of 2025 to $8.6bn by November, up 110% in under a year.

**The global consensus**
To get there, asset managers are converging on a similar approach. They are prioritising working with third-parties to facilitate distribution of tokenised funds. Asked what resources they wanted in place as a Day 1 priority, the most popular response – identified by 70% – was technology partners. The same share of respondents said they plan to distribute through intermediaries, with 36% preferring digital fund distribution platforms and 34% digital exchanges.

![Cala 2.png](/uploads/Cala_2_75bdc5d220.png)

In contrast, just 19% said they would go direct to investors and 11% that they intended to rely on a captive distribution sales force. Rather than making extensive investments into internal resources and capabilities, there is a desire to lean on third parties when it comes to the distribution of tokenised funds, with an emphasis on getting to market quickly and leveraging partners already active in the market.

By focusing on a digital distribution model, asset managers are also hoping to overcome some of the issues of the traditional model, such as slow and costly onboarding, the challenge of regional regulatory variation and limited data transparency. Digital intermediaries that are already accustomed to working across different territories can help to ensure speed to market, as well as facilitating greater transparency for customers and personalised investor journeys.

On products, MMFs and private asset funds are the most favoured for tokenised distribution. MMFs have a particularly strong fit with DeFi demand, because they combine the core features of a traditional cash product – low risk, liquid, yield-bearing – with the additional benefits of direct integration with digital wallets, improved transparency, and the ability to purchase using stablecoins. This is already seeing institutional use. BlackRock’s BUIDL fund is now accepted as collateral for institutional trading on Binance, and J.P. Morgan launched an intraday repo solution using tokenised collateral that reached $1bn in daily trading volume in its first month. Among the DeFi platforms we surveyed, eight out of ten said tokenised MMFs could benefit how their treasuries manage assets and three-quarters saw them as a tool for client retention. Within five years, half expect to have increased their tokenised holdings by at least 25%.

![Cala 3.png](/uploads/Cala_3_b594920925.png)
![Cala 4.png](/uploads/Cala_4_b73ecb2f78.png)

While MMFs are emerging as the clearest near-term use case, they are unlikely to be the end state. Private markets, which ranked equally highly in our research, offer a complementary opportunity, particularly as tokenisation begins to address long-standing challenges around access, liquidity and transparency in less accessible asset classes.

More broadly, this points to a wider shift. Treasury management is the entry point, but not the limit of the opportunity. As DeFi platforms evolve beyond balance sheet management into full-service financial ecosystems, tokenised funds provide a way to expand their product offering to end investors — effectively creating a new digital distribution channel for traditional asset managers.

**Where APAC diverges**
Two years ago, our research suggested that Asian asset managers were leading the global charge on tokenisation, with 86% expecting to offer tokenised funds within three years. That specific timeline has proved ambitious, but the direction of travel has held. What has changed is where the barriers now sit. The question is no longer whether product will be available; it is whether the operational and ecosystem conditions exist for distribution to work at scale. So, while APAC broadly aligns with the global consensus on approach, there are some interesting differences in where the barriers lie. This is playing out against a backdrop of rapid regulatory development across the region, with markets such as Hong Kong and Singapore actively shaping the frameworks for digital asset distribution.
The vast majority of global respondents said that the lack of a compelling business case or ROI was either blocking their progress (44%) or limiting it (41%). The single largest blocker for APAC, however, is the challenge of building an ecosystem around tokenised solutions. Some 86% of respondents in APAC said that building an ecosystem around their solution was blocking progress, compared to a global average of 34%. At the same time, certain traditional constraints appear less acute. Integration with legacy systems is less likely to be seen as a hard blocker, and privacy and security concerns are not elevated to the same extent as in other regions.

![Cala 5.png](/uploads/Cala_5_433407df31.png)

Closely related is a second area where APAC stands out: integration across blockchain networks. Firms in the region are significantly more likely to see interoperability across chains as a blocking issue (57%) than their counterparts in Europe or North America (28%).

Taken together, these findings point to a more advanced stage of thinking. Unlike traditional fund models, which can operate within established distribution networks, tokenised funds rely on a broader and less mature ecosystem. The primary challenge in Asia is not building a product, but ensuring that product can operate within a fragmented and still-evolving ecosystem. While MMFs are a natural starting point given their fit with on-chain treasury use cases, the broader opportunity in Asia is not limited to liquidity products. As digital platforms in the region evolve, the ability to distribute a wider range of traditional assets on-chain is likely to become increasingly important.

A third point of differentiation is that firms in the region are notably more open to non-bank stablecoins than their counterparts in Europe and North America. Bank-issued stablecoins are widely accepted everywhere, but APAC shows a greater willingness to incorporate a broader range of blockchain-native payment mechanisms alongside them. At the same time, the region maintains strong acceptance of traditional fiat, suggesting an expansion of settlement options rather than a shift away from existing ones.

![Cala6.png](/uploads/Cala6_c5a3701731.png)

**Making it work**
This points to three requirements for making tokenised distribution work in the region.

First, asset managers should plug into existing ecosystems rather than attempting to build their own. In Asia, where the ecosystem challenge is most acute, the case for working through established networks is even stronger. A platform such as Calastone’s, which already connects asset managers, distributors and service providers across the region, offers a distribution layer that minimises the need for new connections and avoids the fragmentation risk of parallel digital and traditional ecosystems.

Second, design for interoperability from the outset. With multiple blockchains in use across the region’s markets and platforms, the ability to distribute across chains is a requirement for scale.

Third, support multiple payment rails. Fiat, bank-issued stablecoins and non-bank stablecoins each have a role to play in meeting the varied preferences of investors and platforms across the region. APAC’s openness to this range is a competitive advantage, if the infrastructure supports it.

**The road from here**
Volumes remain modest, and the region faces operational challenges in ecosystem coordination and blockchain fragmentation, but this is being met with a growing pipeline of live products and regulatory progress in emerging markets.

The last year has seen a succession of product launches across Asia. HSBC and Standard Chartered have both been granted stablecoin licences by Hong Kong as they bring tokenised products to market in the region. Thailand’s Securities and Exchange Commission recently amended its regulations to accommodate the sale and redemption of tokenised mutual funds, joining Singapore and Hong Kong as jurisdictions actively enabling digital fund distribution. Markets that, only recently, would not have featured in the tokenisation conversation are now positioning themselves alongside the region’s established financial centres.

Globally, the direction of travel is the same. Legal & General has announced that its liquidity funds, representing over £50bn in assets, are now live on Calastone’s Tokenised Distribution Network, bringing a major global asset manager onto blockchain-enabled distribution infrastructure in a live production environment. Liquidity funds are a natural starting point, combining capital preservation, same-day settlement and competitive yield within a structure investors already understand. The launch is a tangible sign that tokenised distribution is moving from theory into practice.

Asia’s tokenisation journey has been slower than once predicted, but also more deliberate. Compared to the rest of the world, the region has a different hierarchy of issues – one that reflects a shift away from internal readiness and towards external dependencies. Yet the ecosystem challenge is not one that asset managers need to solve alone. Those that work through established networks and distribution platforms, rather than building from scratch, will be best positioned to move quickly.


Tokenised Fund Distribution in Asia: Making Digital Distribution Work

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Author: Kate Lin, CAIA

Last week, we tested a strategy with two [Chinese equity indices](https://sg.morningstar.com/sg/news/211963/does-the-rhyming-%e2%80%9csell-in-may-go-away%e2%80%9d-work.aspx), and talked about how it timing the market makes you lose out on gains over the long-term. The modeling of index returns concluded that botching a market-timing decision does sacrifice a period of (strong) returns. It proved our point – time in the market is better than timing the market.

Tom Lauricella, Editorial Direct for Professional Audience at Morningstar, explains that [ineffective market-timing](https://www.morningstar.com/articles/972119/3-charts-that-show-why-investors-should-stay-the-course-throughout-market-turmoil) efforts can result in a significant opportunity cost and show the effects of missing the one best month on an annual return. “Although successful market-timing may improve portfolio performance, it is very difficult to time the market consistently,” says Lauricella, adding that the long-term gains from US stocks have been demonstrated to offset short-term losses.

Even worse, poor market timing means you give up the chance to gain more from the compounding of reinvested gains, therefore the net effect in an investment strategy is negative when compared to a portfolio that stays the course.

**What is Compounding?**

In a short answer, staying the course is the key to allow the compounding to work out. But what exactly drives compounding. Let’s start with what’s known as the ‘compound interest’ formula:

**End value = Initial value of capital*(1+Rate of change)Time**

1.  Initial Capital determines how much in absolute terms you can gain at a certain rate for a period of time.
2.  Rate of Change or the rate of investment return defines at what pace the initial and reinvested capital is to compound.
3.  Time Horizon defines for how many time periods your assets compound itself.

Put simply, compounding can be explained as the money (or returns) your portfolio earns each year, and then both your initial capital and your returns of previous years earn returns, leading to a point where you have a much larger capital pool. That means, the larger each of the equation’s components (on the right) is, the bigger your total capital would snowball into overtime.

It’s clearer in a side-by-side line graph that plots four scenarios. First, we let the base case (purple line) be a portfolio with a starting capital of $10,000. The portfolio invests in assets at the end of Year 0 that could generate an average of 10% each year and remains the same for the next 35 years.

For each of the remaining three lines, only one variable is adjusted in illustrating the outcome upon a shortened time horizon, a lower rate of return and a smaller capital to start in the equation.

![Elements in compounding.jfif](/uploads/Elements_in_compounding_c94ad1f49c.jfif)


With all else equal, beginning with capital in half means the portfolio will grow at the same rate but arriving at the exact 50% in the end value of the base case.

By contrast, when axing the investment horizon and the rate of return by half, what you afford is a return far less than just half of the base case. Shortening the investment horizon gives up the sessions that the portfolio can compound, while a smaller investment return simply flattens the curve by a large extent. Both result in merely 20% in end value as compared to the base case.

With a view to long-term performance, we go back to the base case of our data simulation and assume that in each calendar an investor adds 10% and 20%, in this case $1,000 and $2,000, to their portfolio (shown as dotted lines).

![Enlarging the compounding effect.jfif](/uploads/Enlarging_the_compounding_effect_64ba5c7108.jfif)


We find that upsizing the total portfolio value on a regular basis takes advantage of the compounding, enabling the portfolios to notch high absolute returns. This is for those who don’t have a large pot of starting investment capital, say at the early stage of their careers. Instead of sitting on cash to save up a sizable amount in some time, it is worth considering starting small to let the compound work. Expanding the capital base can come later by building up a disciplined top-up mechanism to your portfolio.

Indeed, the stock market is seen as a risky investment if you look at it for the short term. Data have shown proof that long-term returns have outsized short-term fluctuations and have triumphed over the risk of missing the one best month on an annual return by betting in and out. In practice, trying to call the trough and the peak of the market prices is distinctly tricky. The strategy involves a great deal of knowledge and luck. For individual investors who lack experience and time in technical research analysis, market timing would then be primarily driven by biases like loss aversion or herd mentality, which may cause some investors to end up buying high and selling low. Staying the course will bear fruit if you endure the time with discipline.

 

 

*©2021 Morningstar. All rights reserved. The information, data, analyses and opinions presented herein do not constitute investment advice; are provided as of the date written, solely for informational purposes; and subject to change at any time without notice. This content is not an offer to buy or sell any particular security and is not warranted to be correct, complete or accurate. Past performance is not a guarantee of future results. The Morningstar name and logo are registered marks of Morningstar, Inc. This article includes proprietary materials of Morningstar; reproduction, transcription or other use, by any means, in whole or in part, without prior, written consent of Morningstar is prohibited. This article is intended for general circulation, and does not take into account the specific investment objectives, financial situation or particular needs of any particular person. Investors should consult a financial adviser regarding the suitability of any investment product, taking into account their specific investment objectives, financial situation or particular needs, before making any investment decisions. Morningstar Investment Management Asia Limited is licensed and regulated by the Hong Kong Securities and Futures Commission to provide investment research and investment advisory services to professional investors only. Morningstar Investment Adviser Singapore Pte. Limited is licensed by the Monetary Authority of Singapore to provide financial advisory services in Singapore. Either Morningstar Investment Management Asia Limited or Morningstar Investment Adviser Singapore Pte. Limited will be the entity responsible for the creation and distribution of the research services described in this article.*

How Your Money Works for You

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Author: Valerio Baselli

Looking at the market today, it's easy to forget where we were at around 15 months ago. Many of the market declines of the past decade or so, including the stock market crash of 2008, are fast becoming faded memories for most of us. But it is the investors who endured these difficult times came out in perhaps the best shape, and as is often the case, those who had the nerve to stay invested were richly rewarded.

And yet, the decision about whether to change your investment strategy or sell a fund is usually not clear-cut, even in hindsight. After the dust has settled on a decision and the investment has performed well or poorly, the “right” answer is wholly dependent on the individual. Selling criteria are not a one-size-fits-all list that fit every investor, but there are some situations when selling is particularly ill-advised. Christine Benz, director of personal finance at Morningstar, picks these three key examples.

**Poor Short-Term Performance**
 
It’s almost never a good idea to sell a fund based on weak performance alone, especially over the short-term. You might have been tempted to sell in last year's market sell-off for example, but we now know the Covid crash was the shortest in history. Instead, if a fund is lagging its peers or an index, your first move should be to investigate why that is. It could be that the manager is simply sticking with an investment strategy that happens to be out of favour, as has been the case with many value-leaning funds in recent years. But weak performance may also be a sign that something more serious is afoot - Morningstar's own research has found that many active funds fail to beat the market over the long-term.

Researching an investment’s fundamentals can be time-consuming, which is why you don't want to get too caught up in investigating short-term bouts of underperformance. Most funds, especially those that are using truly active strategies, will trail their peers at times, often for very good reasons and sometimes for a few years or more (that could be the case with some perfectly solid, defensively positioned funds during a market rally, for example).

Instead, save your energy for checking up on funds when they've underperformed over longer stretches of time or in a period when you would have expected them to perform well. If, for example, you selected a fund because of its low-risk tendencies, but it lost far more than its peers in 2020, that's a legitimate reason to ask whether something about its strategy changed or its risk controls weren’t what you thought they were. And even if the fund isn’t bad, it may not be a good fit in your portfolio.

**Inconsistent Performance**

On a similar vein, investors often get themselves worked up when a fund’s relative returns are inconsistent on a year-to-year basis. Sure, it can be comforting to see a fund land in its category's top half like clockwork—and a small handful of funds has actually managed to generate return rankings that have been remarkably consistent from year to year.

But holding all of your funds to that standard would cause you to kick out some fine offerings that, while not consistent performers on a calendar-year basis, are consistent where it counts: they employ their strategies with discipline and don't waver, even if the market isn't rewarding them in the near term.

It's also important to remember that a calendar year is a fairly short and arbitrary time period, and a fund that has looked erratic over January-December time periods may appear perfectly consistent when measured over a different 12-month time frame—say, from April to March of each year. Investors shouldn't get too hung up on year-to-year performance consistency when deciding what to hold in their portfolios. Looking at annualised returns can be a better way to judge long-term performance, as these smooth out good and bad periods to indicate what average return an investor has received each year. 

**Macroeconomic News**

Macroeconomic news - whether it's the direction of interest rates, rising inflation or GDP growth in China and India - often appears right alongside news about the market's trajectory. And it's true that what's in the headlines has the potential to move the markets up or down on a daily basis, or even over longer time frames. The trouble is that by the time a certain news item makes its way into the headlines, other market participants have already digested it and priced it in.

If you decide to sell your fund based on that news, you're likely to be too late. Instead, a better tack for investors, at least as it relates to their portfolios, is to keep their heads down and focus on factors that they can control: their savings and spending rates, the quality of their investment holdings, and the total costs they pay for those investments. There is much virtue in tuning out the noise when it comes to managing your portfolio.





*©2021 Morningstar. All rights reserved. The information, data, analyses and opinions presented herein do not constitute investment advice; are provided as of the date written, solely for informational purposes; and subject to change at any time without notice. This content is not an offer to buy or sell any particular security and is not warranted to be correct, complete or accurate. Past performance is not a guarantee of future results. The Morningstar name and logo are registered marks of Morningstar, Inc. This article includes proprietary materials of Morningstar; reproduction, transcription or other use, by any means, in whole or in part, without prior, written consent of Morningstar is prohibited. This article is intended for general circulation, and does not take into account the specific investment objectives, financial situation or particular needs of any particular person. Investors should consult a financial adviser regarding the suitability of any investment product, taking into account their specific investment objectives, financial situation or particular needs, before making any investment decisions. Morningstar Investment Management Asia Limited is licensed and regulated by the Hong Kong Securities and Futures Commission to provide investment research and investment advisory services to professional investors only. Morningstar Investment Adviser Singapore Pte. Limited is licensed by the Monetary Authority of Singapore to provide financial advisory services in Singapore. Either Morningstar Investment Management Asia Limited or Morningstar Investment Adviser Singapore Pte. Limited will be the entity responsible for the creation and distribution of the research services described in this article.*

3 Bad Reasons to Sell a Fund

Last year was a roller coaster. While structural drivers such as artificial intelligence proliferation and corporate governance reforms buoyed Asian markets in 2025, fast-evolving trade negotiations, ongoing geopolitical tensions, and concerns over slowing economic growth introduced volatility and widened performance dispersions among major Asian markets. As we enter 2026, we draw on Morningstar's extensive on-the-ground research and frequent interactions with portfolio managers across Asia to explore the key themes shaping their strategies. 

Equity
Asian equities were propelled by technology companies in 2025, fueled by the ongoing AI boom, a trend that mirrored the rally in the US market. The Morningstar Asia ex-Japan Target Market Exposure Index returned around 32% in US-dollar terms, extending its gains from just over 10% in 2024. 

![Screenshot 2026-01-29 150758.png](/uploads/Screenshot_2026_01_29_150758_fae12d1380.png)

China equities have reignited market interest following technological transformations and policy support. That said, a slowing economy, overcapacity, and geopolitical tensions remain. Against this backdrop, fund managers are focusing on selective bottom-up opportunities with sustainable competitive advantages. Louisa Lo, manager at Schroder ISF Emerging Asia, steered away from overly crowded areas such as AI-related hardware companies and instead preferred more reasonably valued internet companies poised to benefit from AI advancements, such as Alibaba.

Following a couple of years of strong performance, Indian equities suffered a steep correction in early 2025, and India was the weakest-performing major Asian equity market despite ending the year in positive territory. On the bright side, this also brought valuations to a more reasonable level for select Indian companies. For instance, investors at Fidelity believe that India remains one of the most attractive long-term growth stories in the region, supported by robust economic growth and a benign inflation backdrop, which creates room for further interest rate cuts.

Meanwhile, the South Korean government rolled out a corporate value-up program in 2024, which has influenced how portfolio managers position themselves in the market. For example, investors at FSSA note early signs of meaningful change in the Korean corporate governance landscape, though they believe reforms will likely take time. Martin Lau of FSSA Asian Equity Plus added to LG Corporation over the course of 2025, which he believes has been among the most progressive in corporate governance.

In ASEAN markets, Pauline Ng, lead manager of JPM ASEAN, remained constructive on the supply chain diversification opportunities on offer in the region, while other managers favored Singapore as a source of defensiveness for their portfolios.

Fixed Income
In 2025, despite growth and inflation-related uncertainties stemming from the impact of trade tariffs, US Treasuries delivered solid returns, supported by a series of Federal Reserve rate cuts. The year also proved favorable for riskier credit assets, as spreads compressed across the board, with emerging-market debt among the top-performing segments.

There is a broad consensus among managers that Asian credit fundamentals are expected to remain resilient in 2026, with default expectations staying low. However, a common concern is the relatively tight valuations, which leave limited room for meaningful spread compression. 

From a country positioning perspective, India remains a consensus favorite among Asian credit managers. The country’s macroeconomic strength and robust growth driven by domestic demand are frequently highlighted as key positives. Building on last year’s trend, many managers also continue to favor offerings from the broader Asia-Pacific market, notably Japan and Australia, supported by high credit quality and reasonably attractive yields.

The troubles at prominent real estate developer New World Development over the past year have led managers to adopt a more cautious stance toward the Hong Kong property sector. Meanwhile, China remains out of favor for most investors. Within the higher-quality investment-grade segment, managers note that Chinese credits are trading at very tight valuations, reducing their attractiveness. On the other hand, within the high-yield market, challenges within the country's property sector remain persistent, as evident from the recent developments at real estate developer Vanke, keeping managers cautious.

To learn more about what is top of mind for Asian portfolio managers and how they are positioning their portfolios to navigate the year ahead, please access our full report, [Starting 2026 on the Right Foot](https://www.morningstar.com/en-hk/business/insights/research/equity-and-fixed-income-manager-trends).


Starting 2026 on the Right Foot

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