Fractional property investment company DomaCom today announced an allocation to two mortgage investments by its first branded mortgage fund with DFS Portfolio Solutions (DFSPS), allowing advisers to gain exposures within their client portfolios.
The two first mortgages total about $4.1 million, with the first one drawn down and the second expected over the next few weeks.
“DomaCom has been working with DFSPS for some time to bring about a branded retail mortgage sub-fund on the DomaCom platform that can be accessed by advisers and portfolio managers,” DomaCom chief executive Arthur Naoumidis said.
“Until now, this market was mostly accessed by sophisticated investors, but as a model, DFSPS has unlocked the retail potential of the non-bank sector by making this sub-fund available to clients and advisers who utilise its portfolio services.”
In an environment of highly compressed yields across a range of defensive investments, the non-bank sector is offering annualised target returns substantially higher than the cash rate in a range of 5 per cent to 10 per cent a year.
DFSPS managing director Stephen Romic said he acknowledged how difficult it was to access and manage mortgage assets until the fractional model developed by DomaCom became available.
“DFSPS and DomaCom have been working together for 12 months to build a unique and innovative capability that allows advisers to efficiently incorporate exposures to first mortgage investments within their client portfolios,” Romic said.
“With increasing market volatility expected within a persistently low-yield environment, we wish to take advantage of the prevailing risk premiums whilst they continue to present.
“We are pleased to be able to offer the Australian financial services licensees (AFSL) who use our portfolio service access to this unique opportunity, and we expect further demand in this sector going by the growing interest among new AFSLs.”
Appointed by DomaCom, DFSPS will act as sub-manager with responsibility for decisions on portfolio composition and management, including seeking, vetting and recommending first mortgage opportunities.
In developing an institutional-grade mortgage fund within the DomaCom Fund, DFSPS is aiming to invest an initial $25 million as part of the initial phase and then continue to build over time.