Investment Overview
The FSI MIC offers a unique opportunity to invest in a diversified pool of short-term residential mortgages. It operates as a Mutual Fund Trust, specializing in alternative lending to borrowers who are financially viable but do not fit the strict criteria of major banks. This strategy targets a high-demand niche, aiming to generate strong, stable returns for investors through secured lending at conservative loan-to-values, backed by Canadian real estate.
Key Details at a Glance
| Detail | Specification |
|---|---|
| Investment Type | Mutual Fund Trust (MIC-style) |
| Asset Class | Mortgage Fund / Private Credit |
| Primary Strategy | Alternative Mortgage Lending |
| Risk Profile | Medium to High Risk |
| Target Annual Return (ARR) | 8% – 10% |
| Minimum Investment | $10,000 |
| Investment Horizon | Short to Medium Term |
| Distributions | Paid Monthly |
| Registered Plans | Eligible for RRSP, TFSA, RRIF, and other registered accounts |
| Geographic Focus | Primarily Ontario |
Investment Strategy & Approach
The FSI MIC employs a focused Alternative Mortgage Lending strategy, capitalizing on a gap in the traditional banking sector. The fund’s mandate is to:
- Serve an Underserved Market: Provide intelligent lending solutions to credit-worthy borrowers who are overlooked by major financial institutions, including self-employed entrepreneurs, individuals with bruised credit, and newcomers to Canada.
- Capital Preservation: Manage a well-diversified mortgage pool with a primary mandate of protecting investor capital. This is achieved through a conservative average Loan-to-Value (LTV) ratio of 55%, ensuring significant equity cushion in every secured property.
- Portfolio Diversification: The portfolio consists of a broad mix of low, medium, and high-yield first and second mortgages, spreading risk across various loan types and borrower profiles.
- Short-Term Lending: Focus on short-term mortgage products, which allows for greater capital flexibility and the ability to quickly adapt to changing market conditions.
The Opportunity in Alternative Lending
The current economic environment has led major banks to tighten their lending standards, creating a significant and growing opportunity for alternative lenders like FSI. This strategy offers investors:
- Attractive Risk-Adjusted Returns: The higher interest rates charged to non-conventional borrowers allow for the potential of strong yields.
- Tangible Collateral: All loans are secured by registered mortgages on Canadian real estate, providing a layer of security for investor capital.
- Monthly Income: Delivers a predictable stream of monthly cash flow, ideal for income-focused portfolios.
- Market Necessity: Fills a crucial gap in the financial ecosystem, providing a valuable service to a large segment of credit-worthy Canadians.
Who Is This For?
The FSI MIC is an ideal investment for:
- Investors seeking high-yield monthly income.
- Those looking to diversify their portfolio with an alternative asset class uncorrelated to the stock market.
- Investors who understand and are comfortable with a medium-to-high risk profile for potentially greater returns.
- Individuals who want to leverage the tax-efficient benefits of holding this investment within a RRSP or TFSA.
About the Issuer: FSI Financial
FSI Financial is a specialized mutual fund trust company and a established alternative lender in Canada. With deep expertise in a specific segment of the mortgage market, FSI’s team of lending experts is dedicated to providing capital solutions for borrowers whose needs are not met by traditional institutions. Their philosophy is built on prudent, intelligent lending with a relentless focus on capital preservation and strong returns for their investors.
