Instead of a mutual fund or ETF that holds a portfolio of stocks, a MIC holds a portfolio of carefully-issued mortgages. The borrowers make their mortgage payments to the MIC, which in turn distributes the income to its investors. Unlike stocks, the MIC’s mortgages are secured by the underlying real estate, and are not affected by the stock market’s daily ups-and-downs. It’s a lot of upside, with limited downside.
MICs are exempt from tax under section 130.1 of the income tax act. 100% of the net earnings are distributed to investors as regular, quarterly distributions, and management expenses are kept low.
To get a clear picture of the risks associated with MICs, and what Morex Capital does to mitigate and manage those risks, please download our educational brochure on Mortgage Investing