HELPING YOU ACHIEVE YOUR FINANCIAL GOALS
In today’s evolving market, the traditional 60/40% portfolio approach (equity/fixed income) may not be optimal for every investment portfolio. Now may be an ideal time to rethink your current investment strategy for achieving sustainable long-term growth.
You may be interested in considering a mortgage investment corporation (MIC) as part of your investment portfolio. This type of investment offers exposure to the Canadian real estate lending market and an opportunity to invest with fellow Canadians. The MIC holds a mortgage portfolio made up of a pool of residential mortgages secured by real property.
Mortgage funds, such as MICs, have been around since 1973 however, their popularity has been on the rise with financial advisors and retail investors in recent years. A mortgage fund is becoming a popular choice for investors as an alternative fixed-income product, which has the potential to enhance and provide stability for their investment portfolio.
BENEFITS OF INVESTING IN A MORTGAGE INVESTMENT CORPORATION (MIC):
- Lower correlation to capital markets
Private fixed investments, such as MICs, can act as a defensive strategy to lower the market volatility of one’s overall portfolio. Because the price of MICs are uncorrelated with publicly traded securities, they can provide diversification and potential for more stable returns in different market environments.
- Approach to lending
Mortgage funds can capitalize on higher-yielding lending opportunities that traditional lenders might miss. Traditional lending institutions use a structured approach which can result in missing lending opportunities or misclassifying opportunities as risky. In contrast, private mortgage funds are focused on finding deals that the traditional lending institutions miss, which can result in a higher yield to investors.
- A MIC can add diversification to your portfolio
A MIC can be similar to a mutual fund in that investors pool their money together but instead of investing in equities, a MIC portfolio is made up of carefully selected mortgages that conform to the MIC’s mandate1. It allows for a passive investment management approach with the goal of
spreading the investment across a vast range of individual mortgages to allow for credit risk diversification.
- A MIC is an income product
The return that the investors receive is from the collection of monthly mortgage payments from borrowers. These returns are distributed as a regular dividend (monthly, quarterly or annually depending on the MIC). These dividends can be distributed in cash or reinvested to receive the compounding effect which allows for compound growth on the value of the investment. It should be noted that dividends are taxable as interest income.
HOW ARE INVESTMENT RETURNS IN A MORTGAGE INVESTMENT CORPORATION GENERATED?
Mortgage Investment Corporations (MICs) are flow-through investment vehicles that invest primarily in a pool of mortgage loans with the goal of generating income. By investing in a pool of mortgages (as opposed to an investment in a single mortgage), investors can help diversify the credit risk of individual mortgages. At Alta West Capital (AWC), we pay distributions monthly.
AWC offers two MIC funds which allow investors to earn a targeted yield. Investments are backed by mortgages which are secured against residential properties. Our goal is to create a stable portfolio with consistent monthly returns.
Learn more about our First Place MIC and AWC Diversified MIC
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We are here to help. Contact our Investor Relations team to learn more about investing in MICs.