A Mortgage Investment Corporation (MIC) is an investment fund where investors pool their money to lend to borrowers as private mortgages. By adding their money to this pool, an investor purchases shares in a MIC. This is an alternative fixed-income investment: a security which pays investors fixed amounts on predetermined dates.
A Mortgage Investment Corporation (MIC) is an investment fund where investors pool their money to lend to borrowers as private mortgages. By adding their money to this pool, an investor purchases shares in a MIC. This is an alternative fixed-income investment: a security which pays investors fixed amounts on predetermined dates. Most MICs then supplement the pool of shareholder funds by borrowing money from banks in the form of loans, though the precise arrangement varies from MIC to MIC.
This combination of shareholder funds and bank loans is then lent by the MIC to borrowers in turn. Collectively, the agreements of these borrowers to repay the MIC, together with the real estate that serves as these agreements’ collateral, compose the MIC’s mortgage portfolio. When the borrowers make their mortgage payments, any associated fees and interest are cycled back into the fund. This allows the MIC to pay shareholders their dividends, and if the MIC was themselves a borrower, the banks their interest.
Regulatory Requirements
MICs are subject to regulatory requirements and oversight, ensuring compliance with securities laws and investor protection. In Canada, MICs have been commonly used for real estate investment since 1985, when they were created as a result of Section 130.1 of the Income Tax Act. This federal statute allows investors to invest in a pool of mortgages.
In Ontario, the Ontario Securities Commission is the regulatory body responsible for the management and operation of MICs. The Income Tax Act requires mortgage investment corporations to distribute 100% of net income, as verified by independent audit, to shareholders by way of dividends. Typically, a Board of Directors also provides additional strategic oversight.
Choosing the Right MIC
Choosing which MIC is right for you is not as simple as who has the highest Return on Investment (ROI). It’s important for investors considering a MIC to carefully assess a corporation’s portfolio composition, track record, and mortgage underwriting process. To learn more, check out our “Selecting The Right Mortgage Investment Corporation” blog post. Make sure to assess your own overall risk profile before choosing to invest in a MIC. This could involve consulting with a financial advisor or professional to understand the specific details and risks associated with a particular company.
About Magenta
Since 1994, our goal at Magenta has been to empower our investors to build for their tomorrows and achieve peace of mind. Magenta has delivered our investors strong returns and reliable income while safeguarding capital by applying a risk-mitigated portfolio strategy. We hand-pick our portfolio of residential, primarily first mortgages located exclusively in carefully selected Ontario markets.
Investing with Magenta offers:
Our team of experts will work with you every step of the way to keep you informed and assist you with investment information so you can determine what best suits your needs.
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Early on in your journey into alternative investment options, you likely came across the term Mortgage Investment Corporation (MIC). MICs have entered the spotlight in recent years as a key piece in both the wealth accumulation and the wealth preservation strategies of a variety of investors. This surge in popularity can be
Early on in your journey into alternative investment options, you likely came across the term Mortgage Investment Corporation (MIC). MICs have entered the spotlight in recent years as a key piece in both the wealth accumulation and the wealth preservation strategies of a variety of investors. This surge in popularity can be credited to the many advantages this investment format has to offer, such as reduced risk through diversification, as well as strong and reliable rates of return.
Choosing which MIC is right for you is not as simple as who has the highest Return on Investment (ROI).
Here are five factors to consider when deciding to invest in a MIC:
Read the subscription agreement closely to see how quickly you can withdraw your investment. No one wants to be in a situation where they need access to capital but are stuck in a long waiting period to withdraw an investment- and some MICs will only allow redemptions once per year.
Ask for information on the past 5-10 years’ actual ROI vs. target ROI. Not only will this give you a sense of how accurate the MIC is at estimating ROI, but it also indicates if the MIC can consistently meet or exceed target ROIs. While macroeconomic factors such as the Bank of Canada rate directly affect MIC ROIs, it’s still vital to look for trends in the data to determine the growth trajectory of a MIC.
Learn which housing markets you are investing in and what types of mortgages your money is financing. The specific housing markets and types of mortgages that compose a MIC’s portfolio, whether urban or rural, first mortgage loans or second mortgage loans, are important factors that go into how a MIC determines interest rates and subsequently the potential pitfalls associated with an investment. You should find a MIC whose acceptable level of risk matches your own.
Ask when and how dividends are distributed, especially if you plan to reinvest the dividend in the MIC, as the investment is compounded based on a predetermined schedule. Not all MICs issue dividends on the same schedule, some issue monthly, some quarterly, and others annually.
Prudent investors keep tabs on their investments, and prudent MICs know that the best questions are the ones shareholders shouldn’t have to ask. Check to see not only that the MIC reports with clarity and regularity, but that they can handle ad hoc requests for information. You never know when you’ll need to be able to access relevant details related to your investment at a moment’s notice. Your prospective MIC should have an investor relations manager ready to answer questions, provide additional information, or help you understand the product.
Since 1994, our goal at Magenta has been to empower our investors to build for their tomorrows and achieve peace of mind. Magenta has delivered strong returns and reliable income to our investors while safeguarding capital by applying a risk-mitigated portfolio strategy. The portfolio is constructed of residential, primarily first mortgages located exclusively in carefully selected Ontario markets.
Investing with Magenta offers:
For more information about investing with Magenta, click here.
A 29-year track record of reliable income and strong returns.* Summer has begun! Airlines are booked for family vacations abroad while the beaches here in Ontario will host crowds of people. Cottages and campsites will see loved ones enjoying outdoor sports, campfires, and quality time. That’s what summer is all
A 29-year track record of reliable income and strong returns.*
Summer has begun! Airlines are booked for family vacations abroad while the beaches here in Ontario will host crowds of people. Cottages and campsites will see loved ones enjoying outdoor sports, campfires, and quality time. That’s what summer is all about – resetting, clearing our heads and choosing how we want to spend our valuable time and energy – whether that’s through self-care or making memories with loved ones.
But how do we achieve a carefree summer in a world where we are overly scheduled and carrying the mental load of current events, money, and more specifically, investments? We know we should build for our future and our children’s futures, and that pressure can be stressful…but it doesn’t have to be.
Since 1994, our goal at Magenta has been to empower our investors to build for their tomorrows and achieve peace of mind by applying a conservative portfolio strategy to deliver reliable income and strong returns. As one of Canada’s largest and most established MICs, we have maintained our strong track record by financing quality residential real estate in carefully selected Ontario markets.
Continue reading for more information on our performance history, portfolio strategy, examples of financing and fund details, as well as contact information to start investing today!
Investing with Magenta offers:
Performance History
To learn more about investing with Magenta, e-mail [email protected].
Are you an Investment Advisor? Click here for more information.
How We Manage Our Portfolio
We have a risk-mitigated portfolio strategy. This means we know our markets intimately and we assess our borrowers and their homes thoroughly. We acquired this knowledge over three decades and evolved to become industry experts, assuring you and your family peace of mind.
Portfolio Composition:
Examples of Financing
Our Investor Relations Team
Our Investor Relations Team has combined experience of over 60 years in the mortgage and financial industry. Our collective experience includes strategic oversight, operational risk management and building and maintaining client relationships. We pride ourselves on our excellent customer service and operational excellence. This means you have easy access to not only speak with someone but receive best-in-class service and communication that reassures you every step of the way – from the moment you connect with us to the moment you feel like you’ve finally built for your tomorrow.
Big or small, every investment is a step toward your world of possibility. There is no better time to invest in Magenta than now. After all, 2023 is the year of Magenta.
To find out more on how you can invest in Magenta reach out to Allison Daines Allen at [email protected].
Allison Daines-Allen
Manager, Investor Relations
[email protected]
Direct: 613-699-4939
Toll-free: 1-888-267-1744
Investment Advisors:
Click here for our subscription forms.
To learn more or speak with someone at Magenta reach out to Greg Sinclair or Daniel Werner:
Greg Sinclair
COO
[email protected]
Direct: (613) 699 4963
Toll-free: 1-888-267-1744
Daniel Werner
Account Manager, Investment Advisors
[email protected]
Direct: (613) 699 6485
Toll-free: 1-888-267-1744
*This article does not constitute an offer to sell securities and should be read in conjunction with the offering memorandum dated March 28th, 2023, available for download at this link or from our office. Investors should read the offering memorandum before investing. The foregoing historical performance achieved by the Corporation is not a guarantee of future results.
In addition to obtaining advice from your financial advisor, performing your own due diligence is a first step to investing. Beyond the Mortgage Investment Corporation’s (MIC) own publicly available information, it’s prudent to look at external, unbiased sources of information to get a clear view of where exactly you are
In addition to obtaining advice from your financial advisor, performing your own due diligence is a first step to investing. Beyond the Mortgage Investment Corporation’s (MIC) own publicly available information, it’s prudent to look at external, unbiased sources of information to get a clear view of where exactly you are putting your hard-earned capital.
In our previous post, Investor Tips: Selecting the Right MIC, we focused primarily on information that the particular MIC provided: offering memoranda, subscription agreements and associated fees, liquidity, portfolio composition, how dividends are distributed, frequency and transparency in reporting to shareholders, etc. With that context in mind, this entry looks at building a more complete picture of your potential investment by looking at external sources of information.
In no particular order, here are some great places to gather information and properly vet a MIC:
1. Canadian Mortgage and Housing Corporation (CMHC) – CMHC has a superb collection of data that is regularly updated and analysed by leading economists. Of particular interest to investors is the Housing Market Information section of the website: included are data sets and reports that range in scope from the national housing market to more local housing markets to even more granular neighbourhood details. You can use the information here to evaluate the MIC’s lending policies against your own appetite for risk. For example, you notice that a sizable chunk of the MIC’s portfolio is allocated to higher risk rural properties. Using CMHC’s data sets, you can see that the market outlook for these regions is not ideal. While the potential return is high, you decide it isn’t worth the risk and continue your search.
CMHC’s housing portal is an invaluable resource used at all levels of the industry. Best of all? It’s free.
2. National and Local Publications – Using a keyword search into Google’s handy News filter is a great way to get a feel for how the housing market you are interested in is performing. For example, “Ottawa Housing Market” pulls up plenty of relevant articles from reputable sources. You can even set a custom Time filter via search tools to focus your research on a specific time period.
While National publications such as the Financial Post or The Globe and Mail do a fantastic job of covering broad housing market news, they are inherently focused on only the big stories (read: major urban centres such as Toronto, Vancouver, and Montreal). It’s important to go to local sources for specific details on a given market.
3. Statistics Canada – While slightly less focused than CMHC’s or CREA’s analysis, Stats Canada has a breadth of information on housing and other indicators of economic growth to help inform your decision. Pro tip: use Google to search for region specific data sets. StatsCan’s website is notoriously difficult to navigate.
4. Trade Publications – Websites such as Mortgage Broker News and Canadian Mortgage Trends offer a lot of insight into how professionals in the industry are reacting to industry changes and new MIC products.
5. The Canadian Real Estate Association – CREA provides monthly updates on home sales and home prices for a given housing market. Once you’ve navigated to their statistics page, select the community you want to research and a report for the previous month will appear. Along with the tools above, this helps create a full picture of where a potential MIC would be lending your capital.
These are just a few resources to help jumpstart your own research. The basis for any investment decision needs to be rooted in a fact-based, methodical approach to understanding an investment product.
