Reducing Portfolio Investment Risk
Investing in a Mortgage Investment Corporation (MIC) can be a good way of adding mortgages as an asset class to your current investment portfolio. Shares of a professionally managed MIC can offer investors access to diversification in the mortgage market that may not normally be available to them. Diversification is very important when seeking to lower portfolio investment risk.
In the mortgage industry, a client who elects to directly invest in a mortgage is commonly referred to as a ‘Private Investor’. A direct investment in the Canadian mortgage market requires, in addition to your money, your ongoing investment of personal time to administrate and manage the mortgage. For Private Investors it can sometimes be very difficult to find quality lending opportunities. Perhaps even more importantly, it can be difficult to truly understand the risks involved when faced with mortgage underwriting decisions. Understanding investment risk and pricing the risk correctly is key to successful mortgage investment. Sometimes the best decision is the mortgage you don’t invest in.
Another risk facing a Private Mortgage Investor is the loss of interest income during the period when a mortgage is paid out and the funds are sitting in cash waiting to be reinvested. By investing in shares of a MIC, this reinvestment risk can be reduced because your funds are always working.
Great Pacific Mortgage & Investments Ltd. offers investors the choice of three professionally managed Mortgage Investment Corporations which can help to add investment diversification to both large and small portfolios.
Paul Croy
Video: Why Do You Work at Great Pacific?
Paul E. Croy explains why he likes to work at Great Pacific Mortgage & Investments. He also talks about balancing investment portfolios and mentions MICs are suitable for replacing bonds or fixed income portions of a portfolio.
Video: What is a Mortgage Investment Corporation (MIC)?
What is a Mortgage Investment Corporation (MIC) and who would invest in MICs? – Rory Campbell, Jeffery Moses & Walt Neufeld.
Video: 2009 The Year That Was
Mortgage Investment Corporation (MIC) financial highlights in 2009 and outlook for 2010. – Rory Campbell
5 Things You Should Ask Before Investing in a MIC
There are a lot of questions you should ask before making any investment. Here’s what we recommend you ask before putting your money into a MIC.
- Are you speaking to the person who will be making the investment or a salesperson?
- Can you call up any time to ask about decisions that have been made?
- What is the history of performance on this MIC?
- Does the MIC offer complete disclosure of its mortgage investment details?
- How does the MIC diversify its mortgage investments to protect investors?
- Is there a provision for losses and liquidity?
Not all MICs are the same – A quality MIC investment will provide full disclosure of mortgage investments.
