Mortgage Funds
These are funds that are invested in premium quality mortgages with the intention of providing steady interest income.
Usually the funds are invested in first mortgages on residential property. Some funds hold "conventional" mortgages (the mortgage is for no more than 75 per cent of the value of the property); others hold "insured" mortgages (the loan exceeds 75 per cent of the property's value); some hold both. Some funds also hold industrial and commercial mortgages.
Mortgage Funds are considered to be a conservative investment, with the purpose of generating a steady income. Mortgage funds react inversely to interest rates. Their value will drop when interest rates increase and their value will increase when rates are on the decline. Long-term returns may not be as good as some other funds, like for instance, equities. They also don't have the day-to-day swings in value. The risks in a mortgage fund are generally moderate. The Mortgage funds are not protected by deposit insurance.
If you are an investors who wants steady returns with a lower risk then equities, the Mortgage fund would be a good investment for you. They are considered to be one of the "basic" investments and a good place for a conservative investor to start. They should, over the long term, generate better returns than GICs, term deposits or bonds. (although no returns are guaranteed.) You should investment in mortgage fund for at least a five year period.
Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Please read the prospectus before investing. Unless otherwise stated, mutual fund securities and cash balances are not insured nor guaranteed, their value changes frequently, and past performance may not be repeated.