Fidelity’s First Tokenized Fund Wins Moody’s AAA-mf Rating

Moody's has assigned its highest fund rating, AAA-mf, to Fidelity International's first tokenized mutual fund-style vehicle. The rating covers the fund's ability to preserve capital and meet redemptions under Moody's fund-rating framework.

The vehicle issues digital tokens that represent ownership claims on the fund's underlying assets. The tokens are supported by the fund's existing custodial and administration arrangements and are intended to allow faster transfer of ownership and settlement than traditional share registers.

Moody's review examined the fund's asset composition, liquidity profile, operational controls and the legal structure used to record ownership as tokens. The agency assessed the link between the tokens and the underlying portfolio, the reliability of custody arrangements, liquidity management and the governance of token issuance and redemption.

Fidelity launched the tokenized offering inside its existing product and regulatory frameworks, keeping portfolio management and custody with established processes. Moody's evaluated whether legal protections, pricing, redemptions and investor records were maintained when ownership is recorded as tokens.

Moody's fund ratings are separate from sovereign and corporate ratings and measure the likelihood that a fund will continue to meet payment obligations and satisfy investor redemptions. The AAA-mf rating indicates the fund met the agency's highest criteria for credit and liquidity quality among tokenized mutual fund-style vehicles.

Tokenized funds combine pooled investment structures with distributed ledger technology by issuing tokens that reflect investor holdings. Asset managers and regulators have explored tokenization as a way to change settlement processes, expand access and enable different forms of secondary trading while relying on established legal and custodial frameworks.