Win more, not big. That’s our philosophy on picking which mortgages to back.
A strict focus on sensible gains and consistent small wins from many lower-risk mortgages versus bigger, riskier bets. The number of mortgages in the pool at any one time varies but the average mortgage size has been running at about $350,000.
How a Mortgage Trust can help diversify your portfolio.
For starters, a mortgage trust is a diversified pool of mortgages that consists of conventional mortgages that are secured by residential, industrial, and commercial properties. The objective of mortgage trusts is typically to provide superior yields to the bond market, while maintaining predictability of returns and preservation of underlying capital.
A mortgage Trust provides diversification to traditional equity and fixed income portfolios, and are a means to participate in real estate markets without directly investing in property, while providing the safety of the owners’ equity invested in first risk position. The investors’ equity in mortgage trusts is secured in front of that of the owner.
This is distinctly different than stock in so far as one is never quite sure what the underlying assets of a company are and what the value would be in a falling market. Mortgage trusts are backed up by real assets, with real value.
The Tri City Group Monthly Income Mortgage Trust preferred yield of 8% is higher than historical bond and GIC yields, yet features lower volatility and risk than the stock market. An added advantage of the fund is that the Managers are committed to investing in every approved mortgage in an amount equal to 20% of the first $15 million raised.
This ensures the principals of Tri City have a personal equity stake in the offering, and the loan-to-value ratio of each mortgage is effectively reduced from a maximum of 75% to 60%. Investors also receive preference over Managers on distributions and payments.