DomaCom launched its fractional property investment platform earlier this month.
According to a statement from DomaCom, the agreement with Lonsec will see the new product exposed to a broader market of financial advisers and superannuation funds.
Lonsec director Alfons Fiorindo said he has been “impressed” by the level of interest among his clients in the DomaCom offering.
The DomaCom Fund allows investors to select properties of their choice online and then to invest any amount they deem appropriate, according to a statement.
“An intermediated solution, applications will only be accepted via a properly licensed and accredited financial adviser,” said DomaCom.
“The accreditation process is in place to ensure advisers are fully conversant with the product and able to communicate the product structure to their clients,” said the statement.
“One of the unique aspects of this new property trust is [that] DomaCom will offer a liquidity facility enabling investors to sell their units as opposed to relying on the outdated redemption process which is the current exit process for property trusts and mortgage funds, some of whom have questionable liquidity levels.”
If property assets look shaky all investors head for the exits at the same time…that’s what always happens and always will. Buyers dry up and investors left stranded. No gearing it says…but will the underlying assets have gearing?
Anyway, it’s not my job to analyze managed funds, leave that to the independent experts we are told….until the whatever hits the fan, then it’s the adviser held liable as always.
Is this structure comparable to an LIC in that the unit price may trade at a premium or discount to the underlying Net Tangible Assets of the fund depending on investor sentiment?
The DomaCom Fund is mimicking a typical share investment and that means liquidity is created between a willing seller and a willing buyer at an agreed price. There is no redemption process, only a selling process. This approach avoids the in-built flaw in managed investment funds that relies on there being liquid cash available to meet redemptions. Of course there is more protection. As for Lonsec whilst they do undertake independent research they are also a platform.
Read the PDS. LIquidity relies on new investors purchasing the interests of investors selling down. There is no cash component at the sub fund level to provide liquidity for redemptions. There is no more protection for investors in this solution than any unit trust. There is nothing new under the sun except for the “sales pitch”.
Is Lonsec a marketing company or an independant research firm?