Question 1

What is a mortgage investment fund?

Accepted Answer

A mortgage investment fund sells units to investors at a fixed dollar amount and lends this money to qualified borrowers through a private mortgage. Similar to conventional mortgages, the borrower is responsible for repaying the loan through a monthly mortgage payment consisting of the principal and interest. Investors in a mortgage fund like Perch Capital earn a return from the interest paid by the borrower on their mortgage.

Mortgage investing can take many forms, including mortgage investment corporations (MIC), a mortgage trust or a limited partnership mortgage fund. Each of these have a slightly different structure and tax treatment, but the concept of earning a return is largely the same.

Question 2

Who should invest in a mortgage fund?

Accepted Answer

Investing in a mortgage fund is an opportunity for capital preservation and stable income generation. If your money is sitting in a high interest savings account or GIC as excess capital, and not required for day-to-day expenses, investing in Perch Capital offers a higher rate of return. However, unlike a savings account or GIC where you can start with $100 or $1,000, a mortgage fund typically requires a higher minimum investment.

At Perch Capital, the minimum investment is $25,000. There is no maximum investment limit.

Question 3

Who is not well suited to invest in a mortgage fund?

Accepted Answer

For those who require greater liquidity and immediate access to cash, a mortgage fund investment is not recommended. When you buy units in a mortgage fund like Perch Capital, these units are not traded on a stock market and are subject to resale restrictions under securities legislation. Redeeming units require advance notice and will take time to convert into cash.

Question 4

What are the benefits of investing in a mortgage fund?

Accepted Answer

Diversify your portfolio with a high yield alternative debt investment. There is no asset price volatility, since units are bought and redeemed at the same price. Historically, mortgage fund investments have limited correlation with stocks and bonds. For example, in 2022 even while stocks and bonds were down, with Perch Capital's mortgage fund you would've earned an 8% return
Reduce concentration risk. By investing in a mortgage fund, Perch Capital holds a portfolio of mortgages which reduces exposure to any individual borrower. Most people simply don’t have the financial capacity to do this themselves.
Leverage deep industry expertise. Perch Capital’s mortgage fund team has extensive experience handling underwriting, servicing and mitigating defaults.

Question 5

Are there any fees associated with investing in Perch Capital?

Accepted Answer

No. When you invest in Perch Capital through a registered Exempt Market Dealer (EMD), you are not charged to invest. An Exempt Market Dealer is qualified and licensed to offer securities in private companies that are not listed on a public stock exchange.

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