Benefits of Fractional Property Investing with DomaCom
The DomaCom Fund is an ASIC registered Managed Investment Scheme (MIS) that allows you to invest in one or more properties of your choice via a syndicate-like/fractional investment structure. This means the DomaCom Fund enables you to choose a property of your choice rather than submit to a fund manager’s selection.
Once you have chosen the property/properties and how much you wish to invest, your accredited DomaCom financial adviser will liaise with us to provide instructions for the Fund to buy on your behalf. It really is that simple!
The fractional model enables you to create a diversified property portfolio and avoid the exposure you get from a single asset investment.
- You can purchase between 1% – 100% of units in a property sub-fund.
- You can achieve diversification across property type; rental yield, capital growth and so lowering your risk and enhancing potential returns.
Access to All Properties
You can invest in ALL Australian property types. It’s your choice!
- You can choose areas you are familiar with or have a particular preference for.
You can choose different types of property: Residential, Commercial, Industrial, Retail and/or Rural.
The Fund is registered with the Australian Securities and Investments Commission (ASIC) and is backed by the following professional organisations:
- Melbourne Securities Corporation Ltd (MSC) is a professional trustee firm, licensed by ASIC under Australian Financial Services Licence No.428289. MSC has been appointed as Trustee of the DomaCom Fund to represent and act in the interest of investors, provide regulatory compliance oversight as legislated by the Corporations Act 2001 and in reference to ASIC guidelines.
- Perpetual Corporate Trust Ltd (Perpetual) has been appointed as the Fund’s Custodian. The Custodian of the Fund has bestowed the role of holding the title for each property.
While there are no withdrawal rights from a sub-fund until it is terminated, the DomaCom Fund introduces a liquidity solution not previously available to the property sector.
- You can sell some or all of your units in a sub-fund through the Fund’s liquidity facility provided there is a buyer for your units.
- Other liquidity options are the Fund’s Constitution provides that a sub-fund can be terminated at any time by a vote of unitholders that hold at least 75% of all units on issued and/or after 5 years with a 50% unitholder vote.
The DomaCom Fund has a competitive cost structure, with the added benefits of greater flexibility and control.
The Fund’s annual management fees are 0.22% p.a. in relation to Cash held in your cash account and between 0.44% and 0.88% p.a. of the gross value of your investment in the Sub-Fund depending on the nature of the underlying asset.
Please note there are additional costs associated with the purchase and ongoing maintenance of the property.
High Return On Cash
Why not boost your return for Cash via the Fund’s Cash pool?
- Earn a generous margin over the ANZ daily cash rate for all cash invested in the Cash pool, currently around 1.83% net yield.
- You also receive the pure return on your property, i.e. yield (rent) plus capital value.
An investment in the DomaCom Fund is subject to investment risks. Please refer to the Fund’s Product Disclosure Statement (PDS) and any relevant Supplementary Product Disclosure Statement (SPDS) for a full explanation on these.
So, how exactly does The DomaCom Fund Work?
Each property held in the Domacom Fund is segregated into an individual sub-fund.
The syndicate for each property sub-fund is created via an online crowdfunding campaign process initiated by your DomaCom-authorised financial adviser.
As the fund’s investment manager, DomaCom outsources the conveyancing, property valuation and inspection functions, and the appointment of a buyer’s agent to purchase the property.
Once a crowdfunding campaign process is fully funded and the property is purchased, a sub-fund in the Fund is created to ‘hold’ the property.
- You receive units in the sub-fund based on your investment.
- You receive a share of the ongoing rent and the future capital value of the property.
- The property title is held by the Custodian of the Fund on behalf of the unitholders. The services of Perpetual Corporate Trust RE Services are provided by Perpetual Trust Services Limited ABN 48 000 142 049 AFSL No. 236648.
DomaCom has also created a liquidity facility to give you a liquidity solution on your property investments.
See how the DomaCom Fund compares to Other Property Investment Vehicles
The content of the table represents DomaCom’s opinion only and the ratings have been based on its own assessment criteria.
The ability for investors to select the underlying property that they want to invest in.
Investors in the DomaCom Fund have complete control over their investment decision when it comes to selecting the exact properties that they wish to be exposed to.
Other Investment VehiclesLimited if any
Unlisted Property Trusts, A-REITs and Syndicates – DomaCom believes that the only input investors have is whether to invest in these vehicles in order to gain exposure to the properties already selected by the promoter.
The ability for investors to diversify across multiple property sectors and geographical locations.
Investors in the DomaCom Fund have complete control over their investment decision when it comes to selecting the properties they wish to be exposed to.
Investors have access to any property for sale in Australia by using the DomaCom Fund.
Other Investment VehiclesLimited for residential
Unlisted Property Trusts, A-REITs and Syndicates – DomaCom believes that while diversification within Unlisted Property Trusts and A-REITs are available, the types of properties to which investors are exposed to tend to focus on one particular property class within that structure, such as high-end commercial property or retail shopping centres.
By contrast, a Syndicate, in general, only involves a single property which provides little or no diversification within the property asset class.
The ability of investors to quickly liquidate their investment.
A liquidity facility is available in the DomaCom Fund. Using this facility, investors may be able to sell their units/interests in their property sub-fund.
Other Investment VehiclesLimited except for A-REITs
Liquidity for Unlisted Property Trusts is dependent upon the liquidity of the Fund Manager and their ability to purchase units back from the investor.
Following a bad period in the early 1990s that impacted many Unlisted Property Trusts, many funds today retain freeze clauses in their PDSs, which enables the Fund Manager to freeze redemptions for periods up to 6 months (if the Fund Manager deems it necessary).
In the case of Syndicates, while each syndicate operates under its own rules, investors are generally locked in for fixed periods (e.g. 5 years or more).
As A-REITs are traded on the ASX, they potentially provide greater liquidity provided a buyer can be found for their units. However, willing buyers can be difficult to find during times of severe market volatility or uncertainty.
The degree to which property returns are independent of movements in share prices.
Share market movements have little or no impact on rental yields and capital values on properties within the DomaCom Fund.
Other Investment VehiclesVariable correlation
A-REITs are traded on the ASX. As such, they are subject to the same conditions that can cause share prices to gain and lose value on a daily basis.
By comparison, share market movements have little or no impact on rental yields and capital values on Unlisted Property Trusts and Syndicates.
The degree to which gearing occurs within the property structure.
Gearing is now an option in the DomaCom Fund.
Other Investment VehiclesYes
Unlisted Property Trusts, A-REITs and Syndicates routinely use internal gearing between 30% and 60%. This internal gearing significantly changes the risk profile of these structures.
Please read our General Advice Warning & Disclaimer