How does Blossom mitigate risk? Are Investments with Blossom diversified? Does the BMT or Blossom share any risk of default or is that completely borne by the investor?
Investments on Blossom's platform are structured as mudharabah (profit sharing) and meet various other requirements to ensure they are Sharia compliant.
Providing a capital guarantee in a mudharabah financing is not shariah compliant. For this reason, investments on the Blossom platform do not carry a capital guarantee and bear full risk of loss up to and including 100% of the original capital invested. However, investments on the Blossom platform do have several mechanisms in place to mitigate investor losses in the event of a borrower default. Most notably for our microfinance mudharabah sukuk, in the event of a default, the assets (portfolio asset-backed murabaha financing)will be assigned to a backup servicer and investors will be paid out from that pool of assets.
Any losses of principal capital are first replaced or covered by profit BEFORE the profit sharing is applied. Profit sharing only applies after profit from the portfolio first goes to cover any losses of principal capital.
Investments with Blossom are through intermediary sharia compliant microfinance institutions located within Indonesia called BMTs. These BMTs distribute loans to their members who encompass a wide range of industries. This built in diversification itself adds to risk mitigation by preventing the success of the sukuk being based upon the success of any individual sector.
The full list of categories in the portfolios are as follows:
Investments appearing on Blossom's website and applications are offered pursuant to an agreement with Koperasi Jasa Gerbang Digital Nasional, an Indonesia Cooperative (NIB 0214010200273), and/or the respective parties stated in the investment documentation.
Blossom Investments are not guaranteed or insured, and investors may lose some or all of the principal invested. Blossom is not a financial adviser and statements appearing on Blossom's website and communications from Blossom do not constitute financial advice.
Unless otherwise stated, investment principal and profit are on the basis of Indonesian Rupiah (IDR). Investment performance is subject to foreign currency exchange (Fx) risk and Investments with an otherwise positive rate of return may generate negative returns after conversion to other currencies. Blossom does not provide risk mitigants against currency exchange losses and all gains/losses on foreign exchange are born by the Investor.
Historical Returns are not intended as a promise of future results. Blossom Investments are not insured or guaranteed and investors may have negative returns. Actual results may differ materially from projected and/or historical returns. Individual portfolio results may be impacted by, among other things, the size and diversity of the portfolio, the exposure to any single Note, Beneficiary or group of Notes or Beneficiaries, as well as macroeconomic conditions. Prior to making an investment decision, prospective investors should carefully consider all terms and risk factors stated in the offering documents and information appearing in/on Blossom’s website and apps.
US Residents must qualify as accredited investor under Regulation D of the Securities Act of 1933.