Fortifying portfolios with mortgage investments

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As clients navigate an uncertain economic landscape, savvy advisors are turning to alternatives — particularly private mortgage investments — as core components of resilient, diversified portfolios

WHAT ARE investors prioritizing in today’s market? According to Chris Baker, SVP of investment sales at CMI Financial Group, their focus is on maximizing security while maintaining strong returns – a priority shaped by ongoing market volatility and persistent inflation concerns. Diversification and balanced growth have become critical goals, prompting a growing recognition of alternative investments, particularly private mortgage investments, as a core component in modern client portfolios. “Today’s clients are looking for more than just traditional investments,” says Baker. “They want solutions that offer predictable income, capital preservation, and stability in an uncertain market. Private mortgage investments stand out as a compelling option, providing returns that aren’t tied to the volatility of public markets. These qualities make them an increasingly attractive choice.”

CMI Financial Group (CMI) is a fully integrated alternative mortgage lending and investment company, providing comprehensive private mortgage services for brokers and investors through its four interrelated businesses – CMI Canadian Mortgages Inc., CMI Mortgage Investments, CMI MIC Funds, and CMI Mortgage Servicing. Recognized as an award-winning industry leader and one of Canada’s fastest-growing companies, CMI has funded over $3 billion in mortgages and manages more than $1 billion in assets. CMI is committed to delivering consistent, compelling returns while fostering long-term partnerships built on transparency and trust.

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The next era of private credit

Managed private credit assets

“Today’s clients are looking for more than just traditional investments. They want solutions that offer predictable income, capital preservation, and stability in an uncertain market”

Chris Baker, CMI

Recognition of the value of alternatives is on the rise, with an increasing number of advisors recommending them to their clients. According to a recent study from CAIS and Mercer, 90 percent of advisors currently use alternative investments, with just as many planning to increase that exposure. While private mortgages are a component of the broader private credit market, current data indicate that private credit as a whole is the fastest-growing alternative asset class. According to McKinsey & Company, the private credit asset class totaled nearly $2 trillion by the end of 2023, a tenfold increase from 2009. As clients – especially the high-net-worth cohort – do more independent research, they’re becoming better-educated about the options available to them and expect comprehensive, cutting-edge advice. Addressing these evolving needs by tabling innovative solutions such as those in the alt space is the best way to tap into more business, build resilient portfolios, and stand out in a competitive market.

Private mortgages offer higher yield potential, consistent income, insulation from market volatility due to low correlation with traditional public markets, and inflation protection – attractive factors that make it one of the fastest-growing alt assets. "Identifying investments that align with risk tolerance, return objectives, financial goals, and personal preferences is a top priority for both clients and advisors. Private mortgages offer the flexibility to meet these needs while delivering a distinctive value proposition," Baker notes. He adds that as clients become more informed and ask better questions, advisors are turning to more innovative solutions – a positive shift that marks "a great place for the industry to be."

Mortgage investment corporations (MICs) offer a highly efficient and effective way to integrate mortgage investments into client portfolios. These specialized funds pool investor capital, similar to a mutual fund, and provide private mortgage loans to borrowers, acting as a bridge between investors and those seeking financing. A standout feature of MICs is their ability to deliver consistent return distributions, making them an attractive option for income-seeking investors. Since the underlying mortgages are backed by real estate, MICs generate steady income while prioritizing capital preservation, providing an added layer of security to help protect investor capital. MICs aren’t about replacing traditional investments but complementing them, Baker says. They help stabilize portfolios by reducing reliance on market-traded assets, particularly in volatile times. “CMI’s MIC funds offer a range of risk and return profiles, ensuring there’s an option to match each client’s comfort level and financial objectives,” he explains. “We also recently launched a Wealth Advisor Services Team dedicated to educating and supporting our advisor partners on private mortgage investments and how they can benefit clients. With our expertise as a resource, advisors can confidently present MICs as a compelling portfolio option – it’s a game-changer.”

As a fully integrated alternative mortgage lending and investment company, CMI provides comprehensive private mortgage services for mortgage brokers, investors, and advisors through four interrelated businesses: CMI Canadian Mortgages Inc., CMI Mortgage Investments, CMI MIC Funds, and CMI Mortgage Servicing. A recognized industry leader and one of Canada’s fastest-growing companies, CMI has funded over $3 billion in mortgages and manages more than $1 billion in assets. For Baker, who has more than two decades of experience in the mortgage and investment field, what sets CMI apart is its

unwavering commitment to both its people and its partners. He highlights the company’s “incredible culture of openness, collaboration, and innovation,” hailing it as inspiring and fundamental to CMI’s position as a trusted private mortgage investment provider and partner. “We’re always willing to explore new ideas and push past the ‘This is how we’ve always done it’ mindset. That openness to change fuels innovation and drives our ability to serve clients and partners better,” he adds. CMI’s Wealth Advisor Services Team embodies a collaborative approach, pairing advisors with a dedicated regional vice president (RVP) who serves as a strategic partner. RVPs provide market insights, product education, and tailored client recommendations. From expert advice to operational support such as order execution, meeting coordination, and account servicing, CMI ensures advisors are equipped to integrate MICs into client portfolios seamlessly. “We take great pride in helping advisors deliver meaningful value to their clients,” Baker says. “By providing the tools, insights, and support they need, we empower advisors to integrate private mortgage investments into their strategies confidently, enabling them to maximize the benefits for their clients and build stronger, more resilient portfolios.”

Over the next five to ten years, Baker anticipates significant growth in private mortgage investments, outpacing other alternative options as more investors recognize their value. Investors seeking to avoid market volatility but hesitant to settle for traditional GICs and bonds will increasingly gravitate to higher-yield alternatives, and that’s where mortgage investments truly shine. “Over the next decade, I anticipate that MICs will become a staple in balanced portfolios, especially as clients focus on stable income and capital preservation amid rising retirement numbers, increasing demand for diversification, and ongoing economic uncertainty,” Baker says. “Advisors will increasingly rely on private mortgage investments to bridge the gap between traditional fixed-income products and higher-risk equity options – and MICs are uniquely positioned to meet that demand.” Baker encourages advisors to gather all the relevant information to offer their clients the best solutions, emphasizing that CMI is always available for support. Clients often have complex questions, and CMI’s dedicated support team is ready to help – advisors simply need to reach out and take advantage of it. “The bottom line is that MICs have become an essential tool for building resilient, diversified portfolios, especially in today’s uncertain market,” he says. “With CMI, advisors gain access to expertly managed funds, tailored risk and return options, and unparalleled support – all crafted to deliver the financial success clients strive for and the innovative solutions they now expect.” Have more questions or ready to invest? Connect with a CMI RVP today.

Private mortgages among fastest-growing alt assets

Private mortgage investments on ‘large growth path’

Published February 24, 2025

“By providing the tools, insights, and support they need, we empower advisors to confidently integrate private mortgage investments into their strategies”

Chris Baker, CMI

Commercial and corporate finance

Commercial real estate

Infrastructure

Consumer finance

Securitized products

Addressable market for private credit

Publicly traded investment-grade and high-yield corporate bonds

Held in managed fund vehicles

Directly held on bank and nonbank balance sheets

US lending balance in 2023, $ trillion

Bank

Nonbank

2.1

3.9

1.8

5.7

3.1

1.5

4.6

0.3

7.3

1.9

9.2

12.1

34.0

10.8

Includes aircraft and railcar leasing, equipment leasing, receivables financing, standard corporate loans, and trade finance. Includes auto loans, credit card receivables, residential mortgages, student loans, and unsecured personal loans. Source: Preqin; Securities Industry and FInancial Markets Associations; Global Banking Pools by McKinsey; McKinsey analysis

Trillions projected to flow into alts space

Advisors' appetite for alternatives strengthens

92% of advisors currently use alternative investments

91% plan to increase allocations within next two years

Asset classes like private debt (89%), private equity (86%), and real estate (85%) are popular

CMI also stands out for its commitment to transparency – a critical principle in private mortgage lending, especially given the stigma the industry has faced in the past – and its impressive track record. For instance, CMI’s flagship Balanced Fund celebrates its tenth anniversary this July, having consistently delivered strong, reliable returns year after year. This consistency not only enhances investor confidence but also underscores CMI’s focus on capital preservation. With additional options like the Prime and High Yield Funds, advisors can align investments with their clients’ specific goals and preferences. Another key advantage is CMI’s geographic diversification. By

lending across almost every province, the MIC ensures a well-balanced portfolio of underlying real estate assets. Coupled with a proprietary process that meticulously vets and manages each mortgage, advisors can confidently recommend CMI’s MICs, knowing their clients’ investments are in capable and trusted hands, Baker explains. “Our rigorous approach to risk management, backed by our proven track record, gives advisors confidence that the returns we target for each fund are achievable and aligned with the expectations they've set for their clients.”

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