A Balanced Portfolio with Mortgage Investments

The traditional wisdom in balancing a portfolio is to combine asset classes to balance the risk and reward. A balanced portfolio combines capital preservation and growth, with income generation and long-term return. It will not only deliver a suitable solution in the short term but will also provide the necessary growth capital in the long term. It is possible to customize the portfolio, according to risk tolerance and position in life. 

Traditionally, bond products have been and will remain the backbone of capital preservation and fixed income investments. Alternatively, Mortgage Investment Funds (MIFs) offer an option as an asset class for capital preservation and fixed income. This is particularly true in a reliable robust real-estate market, which can balance out a portfolio.

What is a Mortgage Investment Fund?

A mortgage investment fund (MIF) is typically offered by a private lender to compensate for the shortfalls of traditional institutional mortgage lending. Private lenders generally offer loans to borrowers active in the development process, and they have more flexibility in financing programs, typically offering structures that can be customized to the borrowers’ needs. As a result, borrowers are generally willing to pay higher interest rates for such short-term customized mortgages. Private lending is asset-backed, meaning that the underwriting team will focus more on the asset than a bank typically would while considering the loan.

Investing in a Mortgage Investment Fund

Mortgage investment funds can be used in two distinct ways within an investment portfolio; with sufficient capital invested, the monthly income generated by an MIF can provide a relatively stable income. As an alternative, monthly income can be reinvested to benefit from compounding returns thus exponentially increasing the returns. MIF’s tend to offer returns between 5% – 10% or more, depending on the level of risk an investor is willing to accept. Most of these funds also offer liquidity without sacrificing principal and are registered account eligible.

The Dez Capital Mortgage Fund

We start with an introduction seminar that allows the potential investor to meet with the Fund manager and understand our investment philosophy. Once an investor is comfortable with placing their capital, an Exempt Market Dear will get involved to discuss the risks of such investment. This is an important regulatory step placed by the Ontario Security Commission to provide the investor with an unbiased view of potential investments. After the regulatory and legal steps are taken, the investor receives notice of the number of units corresponding to their capital investment. Here you have the option to receive interest income on a monthly basis, (15th of the following month) or decide to re-invest the monthly distribution. Once the investment is made, Dez Capital Mortgage Investment Fund provides monthly statements to capture the activity in the account.   

As with any investment, understand the risks and make sure you’re willing to take them. To learn more about how you can balance your portfolio through investing in a mortgage fund, speak to one of our Exempt Market Dealers.