SMSF fixed-term deposits will blossom with new app
As fixed-term deposits start to gain popularity for investors, a new offering has opened up for SMSFs with a starting point of as little as $5.
Blossom, a fixed income fintech, is expanding and opening to SMSFs and small and medium-sized enterprises.
SMSFs will now have access to the Blossom Fund, managed by institutional management firm Fortlake Asset Management, which provides access to a diversified portfolio with targeted returns of 5.95 per cent a year.
Gaby Rosenberg, co-founder of Blossom, told SMSF Adviser that with global uncertainty, rising interest rates and sticky inflation, the benefits of having a fixed-income deposit have become clearer.
“Traditionally, fixed-income investing may require a high minimum investment, have long lock-ups and high fees to manage your money,” she said.
“Although some of those have been reduced over the past few years with some firms, they are still often out of the reach of the average investor.”
Ms Rosenberg said Blossom was originally started to “democratise” the fixed income market and the fintech’s expansion into the SMSF and SME sector was a natural progression.
“Usually institutional fixed income fund managers want to tackle institutions and wholesale investors only. We haven't found many institutional fund managers that wanted to tackle the younger investors,” she said.
“We are flipping it on its head and by being able to democratise fixed-income we can reach an economy of scale – a higher volume of users with lower account balances.”
She said Blossom investors have access to high-class investment management and the app is very much technology-focused.
“We had a lot of feedback from our community of around 13,000 clients who wanted an SMSF and SME product,” she said.
Over the past 18 months, Ms Rosenberg said the number of Blossom clients over 55 years has grown.
“They found the product because of the high targeted returns and flexibility,” she said.
“We have already signed up a number of SMSFs and I believe our 5.95 per cent targeted return, daily earnings and no signup, transfer or withdrawal fees have been an attractive proposition for many.”
Ms Rosenberg said there has been a “massive flight to safety” from Australian retail investors since 2020 and a fixed-income strategy is becoming more popular.
“Australian investors are tending to shift towards more conservative investing habits – almost for the first time – and now fixed income has become a desirable investment option.”
The new expanded offering coincides with Blossom reaching the key business growth milestones of $42 million in FUM, 13,000 sign-ups on the platform and a recent targeted return increase to 5.95 per cent p.a.
Ms Rosenberg said Blossom’s rapid growth is due to an increasing knowledge and understanding of bonds within the ranks of the Australian public, coinciding with several interest rate hikes over the last 12 months.
“Fixed income has offered a ballast of stability amidst high market volatility this year and we have seen increased demand for stable returns,” she said.
