DomaCom expands into bonds

08-Feb-2017

By Daniel Paperny

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Fractional investment group DomaCom is gearing up to focus on product innovation and expanding its core offerings to investors after receiving approval from ASIC to deal in securities.

The group said that while it had traditionally specialised in property investment, the new ruling from the corporate regulator allowed DomaCom to vary its Australian financial services licence and open up new investment opportunities for investors through its platform.

In an interview with financialobserver, DomaCom chief executive Arthur Naoumidis said the group would be expanding into corporate bonds and peer-to-peer mortgage bond sub-funds, allowing investors to benefit by accessing the products through the company’s fractional investment model.

The new products were expected to be made available in March, once the group had issued new product disclosure statements, Naoumidis said.

“Fundamentally, if you look at DomaCom, what we’re about is providing solutions to difficult-to-access asset classes for investors,” he said.

“Clearly, the attraction here is that capital growth is not taxed until you sell, which means the investors are getting a compounding value [that’s] really powerful.

“This is very tax-effective and a very good way of building capital over time, which is why it’s so attractive to advisers and clients.”

DomaCom’s mortgage bond sub-funds would offer a yield of 3.54 per cent over the Reserve Bank of Australia (RBA) cash rate with the security of a first registered mortgage and a loan-to value ratio (LVR) of less than 50 per cent, he noted.

“Mortgage bond sub-funds will be the first product we are planning to launch and will allow for investment loans in the DomaCom property portfolio,” he said.

“Mortgage bonds will usually have a fixed term of five years and the current expected return of 5.04 per cent with the security of a first registered mortgage and low LVR is expected to be attractive [to investors].”

The key benefit of offering corporate bond and mortgage products through the platform was offering investors yields that were more attractive than bank deposits, which they could access with a small minimum investment amount using the fractional model, he said.

“DomaCom has many property book-builds that have been waiting for a debt solution and we expect the launch of mortgage bonds to accelerate our property book-builds,” he said.

“In essence, it’s the same principle as property crowdfunding [which is] opening up markets to investors who often don’t have the capital to invest in the traditional ways in these assets.”

DomaCom added it was also currently preparing to launch a home equity release product aimed at Australian retirees looking to secure their retirement future, as well as giving an income and capital growth opportunity to the next generation of investors.

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