A novel soft magnetic composite (SMC) based on spherical FeSi particles precisely covered by hybrid phenolic resin was designed. The hybrid resin including silica nano-rods chemically incorporated into the phenolic polymer matrix was prepared by the modified sol-gel method. A chemical bridge connecting silica nano-rods with the base polymeric net was verified by FTIR, C-13 and Si-29 NMR spectroscopy, whereas the shape and size of silica nano-rods were determined by TEM. It is shown that the modification of polymeric resin by silica nano-rods generally leads to the improved thermal and mechanical properties of the final samples. The hybrid resin serves as a perfect insulating coating deposited on FeSi particles and the core shell particles can be further compacted by standard powder metallurgy methods in order to prepare final samples for mechanical, electric and magnetic testing. SEM images evidence negligible porosity, uniform distribution of the hybrid resin around FeSi particles, as well as, dimensional shape stability of the final samples after thermal treatment. The hardness, flexural strength and density of the final samples are comparable to the sintered SMCs, but they simultaneously exhibit much higher specific resistivity along with only slightly lower coercivity and permeability. (C) 2014 Elsevier B.V. All rights reserved.