Mortgage Investment Corporations and Mortgage Mutual Fund Trusts

What are Mortgage Investment Corporation and Mortgage Mutual Fund Trust

If you are an investor looking for an alternative fixed income investment or for a way to participate in the Canadian real estate market, mortgage investment may be a viable option. In a private mortgage investment, an investor or a group of investors act as the lender to provide money to a borrower for various purposes including buying a house, refinancing a mortgage, renovating a property, or even acquiring and developing a property. As a part of the financing arrangement, the lender takes a mortgage charge against the property (among other securities) to secure his/her investment. The lender is also entitled to receiving monthly interest payments until the borrowed money is returned to the investor at the end of loan term. Many investors find private mortgage investments to be an attractive and secure way to receive passive income while diversifying their investments away from public securities such as bonds and stocks.

Historically, the most common way for individual investors to participate in a mortgage investment was through investing in a syndicated mortgage, a financing arrangement which allows multiple investors to participate in a mortgage loan. However, a syndicated mortgage can be simple, such as refinancing mortgage on a home, or it can be highly complex, such as financing a large-scale real estate development project. Many retail investors participate in syndicated mortgages without fully understanding the risks as they do not have the expertise to assess the risks associated with such investments and are often left in the dark when a mortgage loan does not proceed as expected. As a result, investment vehicles such as mortgage investment corporations (MICs) and mortgage mutual fund trusts (MFTs) have become the more preferred options for mortgage investing for the everyday investor.

Preferred alternatives to syndicated mortgages​

MICs and MFTs are investment vehicles that pool capital from investors and lend it to borrowers in the form of private mortgages. The key difference between these vehicles and a syndicated mortgage is that these vehicles are invested in a portfolio of mortgage loans while a syndicated mortgage is only tied to one mortgage loan. Additionally, under such structures, the investment is actively managed by a professional team, whose activities include but are not limited to:

  1. Sourcing suitable mortgage investments.
  2. Analyzing and underwriting various mortgage applications.
  3. Implement the mortgage loans.
  4. Manage and monitor the loans until the investment is repaid.

In addition to active management, MICs and MFTs also provide further benefits over syndicated mortgages. These benefits include:


The investment is spread across multiple mortgage loans and therefore limits an investor’s exposure in case a mortgage does not proceed as expected.


MICs and MFTs are often subjected to more strict regulations and reporting requirements for investor protection.


Once a syndicated mortgage is repaid, the interest payment also stops. It is the investor’s responsibility to search for the next investment opportunity and redeploy the money which can sometimes take a few months. With MICs and MFTs, the investor continues to earn interest as long as the capital is invested. It is the manager’s responsibility to redeploy the capital. 


With a syndicated mortgage, the investment is tied up until the mortgage loan is repaid. However, given that MICs and MFTs invest in a portfolio of mortgages, there is often ongoing liquidity events that allow redemption of an investor’s investment.

Differences between Mortgage Investment Corporations and Mortgage Mutual Fund Trusts

Given the many similarities between MICs and MFTs, most investors are not aware of the subtle differences between these two investment vehicles. Key differences to note include:

Buying Corporation Shares vs Trust Units

A fundamental difference between MICs and MFTs stems from their legal structures and corresponding regulations and restrictions. MICs are structured as corporations and, by consequence, investors of a MIC are purchasing shares of the corporation. MFTs are structured as a trust and through the issue of units, investors become the unitholders of the trust.

Investment Flexibility

Per regulations, 50% of a MIC’s asset must be invested in residential mortgages and/or cash and insured deposits. This limitation does not apply to MFTs. The manager of an MFT can tailor the mortgage portfolio composition in accordance with the market needs. Nevertheless, the investment mandate will need to be clearly defined and disclosed to potential investors.

Ownership Requirements

MICs and MFTs carry different qualification requirements for ownership. Accordingly, MICs require 20 shareholders whereas mortgage fund trusts need 150 unitholders to qualify.

Ultimately, other than a few structural differences, MICs and MFTs operate the same way and bring similar benefits over syndicated mortgages. From a practical standpoint, both structures provide the opportunity for investors to access alternative fixed income securities that generate passive monthly income. The overarching difference is that MFTs allow the investor to be more selective on what they want to invest in. If you have any more questions regarding MICs, MFTs, or other mortgage investment options at Morrison Financial, please feel free to get in touch with a member of our team today.

To learn more about Morrison Financial’s Mortgage Income Funds, please visit:

To learn more about Morrison Financial’s Mortgage Income Funds, please visit: