CMI VP Julian Clas says higher returns and sense of stability is attractive prospect for investors and fund managers
Why exactly have Mortgage Investment Corporations (MICs) become such an attractive prospect for investors and fund managers as they pivot away from traditional investment portfolios?
It’s something put in the spotlight in a new white paper by CMI Financial Group – and the answer, says Julian Clas, Vice President of Capital Markets and Funds at CMI, lies in higher returns and a sense of stability.
“A key draw of MIC investing is the potential for above market returns compared to other fixed income securities like government bonds, coupled with a smoother ride, which is what investors are really looking for,” he explains.
“Mortgages provide the opportunity to generate enhanced regular returns while providing risk mitigation and capital preservation benefits. These benefits are typically enhanced when you invest into a portfolio of mortgages.”
And with the rise of alternative investments such as MICs into the mainstream, a number of different factors are gaining attention, all of which are covered in the report.
Firstly, there is a growing demand for private mortgage in Canada. Secondly, returns on traditional fixed-income securities remain at historic lows. Thirdly, mortgage portfolios have the potential to outperform traditional bond portfolios.
“Investors today are much more knowledgeable and knowledge seeking,” Clas reflects. “They're researching different topics and reading about how they can maximize their portfolio returns. They’re not passively waiting for their advisor to bring them opportunities.”
“Investors have been doing their own due diligence about our funds and they like what they see. They’re getting into an investment type that they otherwise wouldn't have heard of a decade or two ago. It’s a trend I expect to continue.”
All these topics and more are covered in great detail in Everything you need to know about MICs, a new white paper from CMI available to download here.
