Mortgage Investment Corporations Returns in 2015
The Toronto Stock Exchange lost about 9% last year. But one group of investments that performed well in 2015 were mortgage investment corporations (MIC.) In the beginning of 2015 I held three different MICs. Since I didn’t add any new positions throughout the year it’s easy to calculate my total annual returns from them. Let’s take a look at the results.
Liquid’s MIC returns in 2015:
- Antrim Mortgage Fund: +4.5% return (on $10,300 invested)
- Atrium Mortgage Investment Corp (AI): +8.2% return (on $2,100 invested)
- Timbercreek Mortgage Investment Corp (TMC): -0.6% return (on $2,600 invested)
Total returns = 461 + 172 + (-16) = $617
Overall Return on investment = $617 ÷ $15,000 = 4.1% return
The chart below shows the unit price of my AI and TMC investments compared to the S&P/TSX index, throughout 2015. It does not include dividends or interest.
My total return for holding $15K in MICs last year earned me 4.1%. This rate of return was lower than the historical average of 5% to 8% one would normally expect from a basket of mortgage based investments. I believe a number of negative factors played into this outcome.
- Our economy in 2015 was weaker than economists had expected. The price of oil lost around half its value. As a result, the Canadian economy fell into a recession because it’s very dependent on strong oil prices to grow.
- Another reason is because the Bank of Canada cut interest rates not once, but twice in 2015. Lower rates are bad for mortgage lenders like MICs because they make less money if borrowers pay less interest on their loans.
- Furthermore the annual account fee I paid to my trustee lowered my Antrim Mortgage Fund return by 1.3%.😖
- The last reason is because one of my holdings, Timbercreek (TMC) severely under-performed other MICs. I don’t know if 2015 was just a bad year for the stock or if the drop is due to something more substantial. 😕