While familiar to institutional investors, collateralized loan obligations (CLOs) are relatively new territory for many Canadian financial advisors. But the door is opening to CLO access for retail investors.

It’s an opportune time to consider CLOs. In today’s uncertain interest rate environment, advisors are under pressure to uncover new income opportunities without sacrificing quality or stability. “We think high-quality CLOs fill that gap,” says Aaron Young, Executive Director and Head of Client Portfolio Management with CIBC Asset Management.

A CLO is a credit product that pools corporate senior loans into a single package. The loans generate cash flows that form the CLO structure. CLOs are divided into tranches with different risk and return levels.

As the fixed income landscape evolves, advisors are rethinking traditional strategies. High-quality CLOs — when actively managed and carefully structured — offer a rare combination of yield, quality, and resilience.

The launch of the CIBC Income Advantage Funds can help meet the need for a prudent and institutional-calibre income solution.

Built on strict underwriting standards

Some advisors and investors associate the acronym CLO with the structured products that helped trigger the 2008 financial crisis. But there are crucial differences between CLOs and that period’s CDOs (collateralized debt obligations).

CLOs aren’t built on subprime mortgages, or any mortgages, notes Young. They comprise loans that are typically made to large and midsize U.S. companies, including household names like American Airlines and Burger King. “They’re blue-chip companies we know well,” he says.

CLOs follow strict underwriting standards. Moreover, CLOs weathered the financial crisis thanks to their conservative structuring. The latest iterations, sometimes called CLO 2.0, feature even more robust safeguards and high-quality inputs.

CLOs represent a USD $1.2-trillion market globally. That’s bigger than Canadian government, provincial, and corporate bonds. The majority of CLOs are AAA-rated securities, representing about 60 percent of the market. In the case of the CIBC Income Advantage Funds, the exposure is at least 80 percent AAA, and will probably be closer to 85 to 90 percent. The remainder are AA- and A-rated securities.

High-quality CLOs like these have a solid track record, even during periods of market stress. “That speaks to the quality of these instruments,” says Young.

Increased potential for yield

CLOs are particularly compelling given today’s backdrop of rate volatility and tightening spreads. One of the best reasons to consider CLOs is their yield potential.

Compared to traditional fixed income, AAA-rated CLOs have consistently offered higher income without meaningfully increasing risk. An investor with a core bond portfolio made up of government and corporate bonds can possibly achieve higher overall portfolio income by adding an allocation to a CLO fund.

Balanced and growth investors can benefit, too.

For balanced investors, CLO funds offer access to a broader range of fixed income assets — compared to the traditional stock and bond mix — to help manage risks and reduce overall portfolio volatility.

Growth investors might also be looking for ways to earn higher income without taking on excessive equity risk. These funds introduce an income-generating asset class that complements their long-term growth strategies.

CLOs are floating-rate instruments, so they also offer built-in protection against interest rate volatility while still offering predictable cash flows.

Complementing a core allocation

This isn’t about replacing traditional holdings but augmenting them, says Young. Government, corporate, and high-yield bonds remain the foundation of fixed income portfolios. “A CLO fund is a great complement to sit alongside that core allocation.”

Young notes that, historically, CLO sleeves have shown low-to-zero correlation with core bond portfolios. This is valuable to advisors who want to build portfolios designed to “zig when one zags,” he says.

AAA-rated CLOs are primarily held by major banks, insurance companies, and pension funds. CIBC Income Advantage Funds invest in CLOs by taking a similar approach.

“We’re following the playbook of institutional investors,” says Young.

In this case, to capture income advantages often unavailable to individual investors. To do so, the CIBC Asset Management team focuses on three layers of risk management. They take a deep dive on: 1) the underlying loans in the CLO instruments; 2) the CLO managers (“We’ve covered them for decades and have seen them through cycles,” Young says); and 3) the structuring of a CLO to ensure it aligns with risk-return goals.

The CIBC Income Advantage Funds leverage over 50 years of CIBC Asset Management’s experience as an active fixed income investor, with specialist research teams and a dedicated credit analysis team. As a distinct asset class, CLOs offer investment opportunities that may not be available through traditional fixed income options. Through rigorous due diligence and a disciplined approach, CIBC Asset Management aims to deliver high-quality income and diversification that advisors can confidently recommend — in uncertain times and beyond.

Canada’s fixed income landscape is foggy. A mix of slowing growth, trade uncertainty, and pending rate cuts has left investors — and their advisors — looking for clarity.

While fixed income portfolios may not be sprinting, they’re not standing still either. Opportunities exist for those taking a methodical yet active approach, says Darcy Briggs, a Senior Vice-president and Portfolio Manager at Franklin Templeton Fixed Income.

Several macro trends are shaping investor behaviour. In past years, government spending, an influx of immigration, and a housing boom “created an illusion of growth,” says Briggs. But deeper productivity and investment gaps remain. “Looking at Canada, we expect softer growth. GDP per capita is somewhat flat.”

Meanwhile, the on-again, off-again effects of U.S. tariffs, and whether the United States–Mexico–Canada Agreement will be renegotiated, are adding fresh economic headwinds. Until that gets settled, Briggs says consumers and businesses are going to “sit on their hands.”

“We may end up being one of the lowest-tariffed countries in the world when all is said and done, but we don’t have any visibility on that.”

If Canada has a quick resolution to tariffs, Briggs feels that mediocre growth might follow. If tariffs remain substantial, he says the country will face a full-blown recession over the next year. There are several paths, but Briggs feels that none are highly bullish for growth.

He expects the Bank of Canada will cut rates to about 2 percent by year-end, citing mortgage resets and indebted households as key drivers. Inflation remains a wildcard, too.

With these conditions providing the backdrop, what are the prospects for fixed income investors? In times like these, fixed income isn’t just about yield; it’s about discipline.

“Markets are remarkably comfortable with the current level of risk. We have been generally very cautious about chasing spread. We’re trying to be as disciplined as we can about credit, duration, and currency. We prefer to take a lot of little bets rather than a few big bets,” says Adrienne Young, a Senior Vice-president and Director of Corporate Credit Research, Canada, with Franklin Templeton Fixed Income.

Global diversification is key

That translates into an approach grounded in global diversification (access sectors unavailable in Canada), liquidity (act when opportunities arise), and defensive positioning (hedge selectively with derivatives).

In Canada, the bond market is smaller and less liquid, Young adds. “If other people are selling and we’re one of the few buyers, we can lock in great pricing on good-quality bonds that we might not otherwise get.”

What’s worth considering now? The short list of sectors that Franklin Templeton is overweighting includes energy (pipelines and distribution). Young touts the “contracted cash flows with high-quality counterparties.”

She’s bullish, too, on some of the resources that are important to farming and utilities (they’ll be needed regardless of the economic cycle), U.S. healthcare and industrials, and defence. Young also mentions U.S. money-centred banks, which are trading at a discount compared to Canadian banks.

This sizable investment in U.S. sectors acts as “a bit of a ballast against any correction that may affect Canadian consumer-related credit,” she adds.

In contrast, areas of concern include Canadian consumer credit, the retail and auto sectors, and credit unions (whose housing-loan books are skewed to the Toronto and Vancouver markets).

In the current environment, fixed income is generating income again. “The FTSE Canada Bond Universe yields just under 3.5%. Our preference for holding more credit than the index allows us to deliver additional yield to clients in our strategies”, says Young. That means less variance compared to some equity funds without the associated risk, offering real value.

Made-in-Canada expertise

There was a time when fixed income didn’t pay. Now, it’s a viable contributor for income and diversification, and cushioning client portfolios. “If we do have a downturn in economic activity, fixed income should still provide that buffer,” says Briggs.

While global exposure is vital, there’s no substitute for being on the ground. The Franklin Templeton team is based in Calgary, and Briggs says Canadian investors benefit from managers who understand the local nuances, whether around investors’ objectives or constraints. “You have a better knowledge of the intricacies of the marketplace. It becomes a lot more difficult if you’re removed from that.”

Rather than make major directional bets, Franklin Templeton is emphasizing a nimble posture. This measured stance enables the firm to be opportunistic.

“To benefit their clients around fixed income, advisors should think active, not passive, and diversify thoughtfully”, Young says. “Volatility demands vigilance to help smooth the ride.”

“Active management allows for better control over credit risk, interest rate risk, and liquidity risk, which can be crucial during periods of market turbulence,” says Briggs, adding that this isn’t a time to underestimate fixed income’s contribution. “Uncertainty will be with us for a period of time.”

The Franklin Templeton team believes that’s not necessarily bad for fixed income investors.

“Volatility is risk, of course. But if you’re an active manager that has been collecting liquidity — and we have — it’s an opportunity,” says Young.

She explains that sometimes certain areas of the market will go completely no bid. “That’s when Franklin Templeton can go in and say, ‘You have to sell. Well, we can buy. And here’s the price.’

“That’s an opportunity to really outperform for the investor,” she continues. “Active managers can offer you more diversification than the passive benchmark, capitalize on market opportunities, and respond to changing market conditions in uncertain times.”

Important Legal Information
This material is intended to be of general interest only and should not be construed as individual investment advice or a recommendation or solicitation to buy, sell, or hold any security or to adopt any investment strategy. It does not constitute legal or tax advice.
The views expressed are those of the investment manager, and the comments, opinions, and analyses are rendered as at publication date and may change without notice. The information provided in this material is not intended as a complete analysis of every material fact regarding any country, region, or market.
Commissions, trailing commissions, management fees, brokerage fees, and expenses may be associated with investments in mutual funds and ETFs. Please read the prospectus and fund fact/ETF facts document before investing. Mutual funds and ETFs are not guaranteed. Their values change frequently. Past performance may not be repeated.
Franklin Templeton Canada is a business name used by Franklin Templeton Investments Corp.

From

Related Article

(Runtime: 6 min, 11 sec)

Text transcript

Geoff Lang:

My name is Geoff Lang, Senior Vice-president at Equiton.

What are the benefits of private REITs?

Geoff Lang:

The benefits of private REITs are threefold, right? So there’s stability amidst market volatility, which is what we’re seeing today in the marketplace. And, there’s always going to be demand. Everyone still needs a place to live, so that provides that stability within the asset class. So that’s number one.

Number two is that stable and reliable monthly income that’s tax efficient. We invest in apartment buildings; our residents are paying rent. So that’s that stable monthly income that our investors are looking for.

And thirdly, you own a tangible asset. There’s something to be said about owning a physical building that you can touch. We know we’re an alternative, but the stock market, you’re not actually holding anything physical. So that tangibility of the asset class is also a major benefit. So that stability, that monthly income, and that tangible asset that you’re investing in provides a lot of stability for our clients.

Discuss how private REITs can offer returns in various market conditions like volatility, a low-rate environment.

Geoff Lang:

We all know there’s various market conditions out there in the economy, both macro and micro as well. Rewind three, four years ago, interest rates are increasing. We’re in that inflationary environment, right? So, in that inflationary environment, private REITs offer stability because when rates are increasing, so, too, does the rental income. So we saw in that inflationary environment rents increasing year over year, which provides a nice return for our end investors. Now, rates have started to come down. So what happens in a lower-rate environment, we can borrow for cheaper. That helps us with acquisitions. So no matter the market economy, there’s always going to be a benefit for private real estate. And when you have occupied properties — you know, our portfolio has an occupancy rate of over 97 percent — prices tend not to fluctuate like the stock market. So that shelters that blow we have been seeing in Q1 of 2025 so far to start the year. And that’s why the asset class has become a benefit for a lot of our investors to, sort of, be that all-weather-type strategy, no matter the market conditions.

Are private REITs a good source of income for clients?

Geoff Lang:

I think why a lot of investors invest in private REITs is that stability of the monthly income. We know there’s, you know, GICs out there — that’s your guaranteed income. But as rates have come down more recently — you know, your average GIC rate is around that 3 percent — a lot of investors are looking for more income in times of market volatility. So, as I mentioned earlier, we’re collecting rent from our residents. They pay us on a monthly basis, and we’re able to distribute at around a 6 percent yield. That’s tax efficient — we’re 100 percent return of capital, so very tax efficient. And this is why private REITs are so sought after. It’s not because of the alpha, the upside benefit. It’s that stable, reliable monthly income that’s tax efficient, that can get you higher than a GIC. And, in times where interest rates are coming down and those yields are dropping, it’s important to still achieve that monthly income that investors are looking for. And that’s why they look to private REITs in times of volatility and lower interest rates.

How can advisors discuss private REITs with their clients?

Geoff Lang:

So it’s important when discussing private REITs within your client base and just, sort of, the how-to. But one thing that’s a benefit is that Canadians just love talking about real estate, and it’s fairly easy to understand. And, you speak to clients and, you know, anyone out on the street, “How’s the real estate market doing? Is it good? Is it bad?” It all gets lumped into one bucket. We’re multifamily, but it’s very easy to understand because you’re collecting rent from residents or tenants, and then you’re looking for the properties to appreciate in value. So it’s very straightforward. Collect your rent, distribute it out to unit holders, and have the assets appreciate in value over time. And, I think Canadians have realized that it’s very onerous and there’s a lot of headaches to doing this yourself. Everyone loves the idea of having multiple rental properties collecting income, but it’s very difficult, very time-consuming. And if you have a full-time job, it proves very difficult. So that’s why you outsource it to the professionals where you can hold a portfolio, a basket of apartment buildings similar to our fund; you don’t have the headaches of, you know, doing renovations and taking calls late at night; and you have that upside potential with the monthly income. But, how advisors can discuss it is plain and simple. We’re an asset class. It’s an all-weather- type strategy, collecting monthly income and looking for the properties to appreciate in value because a lot of clients don’t want the stress of being a landlord. And, to look at it at a different perspective as well, that 60/40 asset class split of 60 percent equities, 40 percent fixed income — that’s no longer the case anymore. It’s now more of a 50/30/20, where that 20 percent is looking to alternatives to either how to generate alpha or add income stability to client portfolios. So we’re kind of a buffer between the two. We’re trying to get that alpha position for the appreciation of the apartments, but that income stability, collecting that rent, and distributing it out to unit holders. So I think we fit in that nice 20 percent bucket there.

In a period defined by an evolving trade war, heightened political risk, and subdued economic growth, investors are looking for sources of stable income. Private real estate investment trusts (REITs) focused on rental apartments are one solution, offering an “all-weather strategy” ideal for navigating a range of market conditions, says Geoff Lang, SVP, Business Development at Equiton. 

For instance, the rising interest rates and inflation of recent years were a cause for concern among many investors, he says. But as inflation carved into their traditional investment returns, rental income continued to grow — underscoring private REITs’ utility as a hedge against market forces and a smart tool for diversification. 

“We’re tailored for those long-term investors who can ride on multiple market cycles and want that monthly tax-efficient income over time.“

“With interest rates continuing to decline, your average GIC rate is around 3.5%.* That just isn’t enough income for many investors,” says Lang. “At the same time, volatility and inflation can take a chunk out of publicly traded dividend-paying stocks and fixed-income assets that usually pay a little more. That’s when investors start looking at private REITs, which offer both stability and generally higher income.”

Lang notes the three key benefits of private apartment REITs: reliable, tax-efficient monthly income, climbing rental demand, and the opportunity to invest in a tangible asset. Here’s what they can mean for investors.

1. Stable tax-efficient income

While there are as many types of private REITs as there are property types, those focused on Canadian rental apartments  are often seen as the “gold standard” for stability, particularly among institutional investors like pension funds, says Lang. Private REITs offer investors shares of a portfolio of apartment properties, which can be diversified by location, age, and so forth, and typically pay monthly distributions via rental income.

When it comes to tax efficiency, private REITs may classify distributions as return of capital (ROC), which effectively allows investors to defer taxes on those returns until they sell the investment. “As we know, this is better than dividend income, as well as interest income, like a GIC. So, it’s very strategic for clients looking for tax-efficient cash flow,” says Lang. “It also benefits those with a longer investment horizon, allowing them to reinvest the full amount of their distribution.”

2. Ongoing demand

Canadians will always need a place to live; that’s why there’s ongoing demand for rental units across Canada, says Lang. As well, Canada has experienced historically high levels of population growth, adding further pressure on housing.

In fact, “rental market conditions across Canada’s large urban centres remained tight,” according to the Canada Mortgage and Housing Corporation’s fall 2024 rental market report. Further, rents increased by 23.5% when units turned over. 

“When you have occupied properties,it signals a healthy rental portfolio,” says Lang, adding that Equiton’s Apartment Fund has an occupancy rate of nearly 98%. Compare that to Canada’s national occupancy rate, which has hovered around 96% in recent quarters, signaling intense pressure in the rental market.

3. A tangible asset

“Canadians just love talking about real estate, and it’s fairly easy to understand,” says Lang. Still, not everyone wants the headache of becoming a landlord, he adds, which comes with the responsibility of acquiring properties that have the potential to appreciate in value, collecting rent from tenants, doing renovations, and taking calls late into the night. 

“Canadians have realized that it’s very onerous,” he says. “We see many mom-and-pop style owners divesting their properties and making their lives easier with well-run private REITs.”

He emphasizes that when investors own shares of a private REIT, they become direct owners of tangible real estate investments. “Investors love being able to visit the properties, to drive by and see them. It’s just like owning a building yourself,” says Lang. “The difference is that someone else is managing the property and you can go home smiling at the end of the day.”

Private REITs play a bigger role as investor needs evolve

The traditional 60/40 portfolio split no longer offers the same mix of growth, stability and income it was once known for, says Lang.

“It’s now more of a 50/30/20, where that 20% is allocated to alternatives providing alpha or income stability, depending on their goals,” he says. “Private apartment REITs offer a kind of buffer between the two. You get a mix of appreciation of the properties — your alpha — as well as that income stability, which comes from collecting rent and distributing it to unitholders.”

That said, Lang notes that careful consideration must be given to choosing a private REIT that’s right for one’s clients.

“It can be difficult choosing which REIT is the best, which one is the safest for their clients,” says Lang. “Making sure the company is implementing a corporate governance strategy before allocating is a must.”

To start, suggests Lang, ensure the fund manager has audited financials available on its website, is being as transparent as possible, has an independent board, and operates like a public company — even if it’s private. Lang adds that private REITs are well suited toward long-term investors with a three- to five-year hold. 

Equiton’s Apartment Fund is one such investment solution that targets 8% to 12%, net of fees. This includes 6% in monthly income and 2% to 6% in capital appreciation, explains Lang. 

“We’re tailored for those long-term investors who can ride on multiple market cycles and want that monthly tax-efficient income over time,” Lang says. “Private Canadian apartments haven’t had a negative year in over three decades, making them a great choice for this kind of investor.”

Click here for more information on Equiton’s Apartment Fund. 

https://www.ratehub.ca/gics/best-gic-rates
Accessed 4/23/2025

Impact investing is an approach that is increasingly popular among investors seeking to combine financial returns with a positive social or environmental impact. This approach, though relatively recent, has rapidly developed into a pillar of sustainable finance. Here’s a look at this aspect of responsible investing that addresses the social and environmental issues of our time.

The origins of impact investing

Impact investing originated in the early 2000s with the emergence of a new generation of investors aware of global issues such as climate change, social inequality, and poverty. The idea of combining financial returns and positive impact began to take shape at that time.

The term “impact investing” was popularized in 2007 by the Rockefeller Foundation, which supported the development of this field by funding studies and bringing together experts to define the criteria and objectives of this approach. Since then, impact investing has grown significantly with the support of financial institutions, foundations, and even governments.

Although the market is still modest, with less than 10% of sustainable funds in Canada considered impact funds¹, the potential is high and interest sustained.

How is impact investing different?

Impact investing seeks to achieve two objectives. The first is to generate a positive long-term return, like any other investment strategy, and the second is to create a positive social or environmental impact. To achieve this, asset managers look for companies offering products and services that contribute positively to certain ESG issues. To fit the definition of impact investing, two important criteria must be met: Intentionality and measurability.

1. Intentionality: Impact investors deliberately seek to generate a positive social or environmental impact in addition to financial returns. This intention is central to the investment strategy and guides the selection of companies or projects in which to invest.

2. Measurability: Unlike other forms of responsible investing, impact investing requires a rigorous measurement of results. Investors use specific indicators to assess the social or environmental impact of investments, which allows them to track progress and adjust strategies accordingly.

Examples of metrics used to track positive impact could include: Added renewable electricity capacity (measured in MWh), an increase in treated, saved or supplied water (measured in megalitres), or an increase in the number of affordable housing units.

For some, a third criterion must be considered. However, it is more contested and remains at the heart of debates on impact investing.

3. Additionality: Additionality requires demonstrating that the impact would not have been possible without the capital invested. Additionality advocates maintain that an attractive investment opportunity could also be realized without sustainable financing. For some, additionality implies that impact investors direct their capital toward less attractive investments and would therefore be willing to accept a lower financial performance or a lower risk-return ratio.

Current state of the impact investing market

Today, the impact investing market is booming. According to projections, assets under management in this sector are projected to reach USD $7.7 trillion in 2033, more than double what they currently represent². This growth is fueled by increased demand from institutional and retail investors who are increasingly concerned about the non-financial impacts of their portfolios.

Examples of sectors targeted by impact investing include renewable energy, education, health, infrastructure, and access to clean water. Investors are also increasingly interested in tech companies that offer innovative solutions to social and environmental problems.

The impact investing market still faces some challenges. Currently, standardizing impact measurement criteria represents a challenge since no universally accepted framework exists. Moreover, the perception of a trade-off between financial returns and social impact remains an obstacle for some investors.

A market with many possibilities

The future of impact investing looks promising, with a number of trends that should favour its expansion.

First, governments and regulators are increasingly focusing on corporate transparency and accountability, which could help boost investor confidence in the impact investing market.

Second, technology will play a key role in the development of this sector. For example, artificial intelligence can be used to analyze complex data and identify high-impact investment opportunities. The fintech sector also plays a significant role in making impact investing accessible to a wider audience.

Finally, the rise of younger generations, who are more concerned about social and environmental issues, benefits impact strategies. Investors of tomorrow are more likely to favour responsible investments and their influence could accelerate the adoption of impact investing.

What can we conclude?

Impact investing has come a long way since its beginnings, from a niche to a fast-growing sector. With its distinctive features and potential for social and environmental transformation, it represents a new approach to investing. Challenges remain, but the outlook is encouraging and this sector is on track to gain even greater importance. For investors looking to align their investments with their beliefs, impact investing offers a unique opportunity to generate both a financial return and a positive impact on the world.

NBI strategies that integrate impact investing

¹ National Bank Investments, 2024, based on CIFSC data

²https://www.thebrainyinsights.com/report/impact-investing-market-14024#summary

Legal notes

The information and the data supplied in the present document, including those supplied by third parties, are considered accurate at the time of their printing and were obtained from sources which we considered reliable. We reserve the right to modify them without advance notice. This information and data are supplied as informative content only. No representation or guarantee, explicit or implicit, is made as for the exactness, the quality and the complete character of this information and these data. The opinions expressed are not to be construed as solicitation or offer to buy or sell shares mentioned herein and should not be considered as recommendations. For your convenience, the Website may include links to other Internet sites or resources and businesses operated by other persons (collectively “Other Sites”). Other Sites are independent from National Bank of Canada, and National Bank of Canada and its subsidiaries have no responsibility or liability for or control over Other Sites, their business, goods, services, or content. Your use of Other Sites and your dealings with the owners or operators of Other Sites is at your own risk.

© National Bank Investments Inc., 2025. All rights reserved. Any reproduction, in whole or in part, is strictly prohibited without the prior written consent of National Bank Investments Inc.

® NATIONAL BANK INVESTMENTS is a registered trademark of National Bank of Canada, used under licence by National Bank Investments Inc.

National Bank Investments is a signatory of the United Nations-supported Principles for Responsible Investment, a member of Canada’s Responsible Investment Association, and a founding participant in the Climate Engagement Canada initiative.

Can one investment vehicle address the goals of both your income- and growth-oriented clients? Yes.

Split Shares are unique investment funds that deliver two classes of shares that can be “split” into Preferred Shares for steady dividend income and Class A for an equity investment with built-in leverage.

Our infographic illustrates how Colin, a successful investment advisor much like you, puts Split Shares into action for Sarah (income) and Eli (growth) and shows the math behind it.

To help their clients succeed, advisors need to rely on more than just traditional investments. They need to create portfolios that balance growth, income, and risk.

That calls for strategic portfolio diversification, which is why alternative investments have become increasingly popular. With their relative simplicity and return potential, mortgage investments are among the fastest-growing alternative asset classes.

“Mortgage investments offer enhanced returns, reliable income, and protection from market fluctuations. This makes for more resilient portfolios and gives investors a more secure foundation for long-term investment planning,” says Chris Baker, Senior Vice-president, Investment Sales, with CMI Financial Group.

CMI offers end-to-end private mortgage services, including alternative financing solutions to borrowers and a compelling fixed-income alternative to investors. The firm has funded more than $3 billion in mortgages and is one of Canada’s largest private lenders by new originations. CMI is also one of our country’s largest private mortgage investment firms, with more than $1 billion in assets under management.

What makes these mortgage solutions so appealing, and how can advisors best incorporate them into client portfolios?

Standing out during a volatile time

As Baker explains, investors are facing a period of ongoing market volatility; they’re also concerned with market concentration, inflation, and interest rate moves. Private mortgage investments stand out as a compelling choice within the alternatives universe. They offer attractive yields, predictable income, inflation protection, and capital preservation through real estate backing.

Baker notes that private lenders offer greater flexibility in the mortgage application process, often focusing on factors like equity and cash flow, without the rigid metrics required by traditional lenders. These mortgages carry higher rates as a result, translating into higher return potential for investors.

Mortgages are also asset-backed (by real estate collateral) investments. If a borrower defaults, the property can be sold to cover the loan. “This also makes them a safeguard against inflation and less prone to recessionary risks,” says Baker.

Unlike stocks and bonds, private mortgages have low correlation to public markets, providing stability during periods of volatility. As inflation rises, property values typically increase, strengthening the value of the underlying collateral. The steady income generated through regular interest payments enhances stability, offering returns even in uncertain times.

Benefits of MICs

CMI offers an efficient way to reap these benefits through mortgage investment corporations (MICs).

MICs are an alternative to direct mortgage investments, where investors fund entire mortgage transactions (either individually or as part of a small group). Instead, a MIC is a pooled fund that invests in a diversified portfolio of private mortgages on behalf of investors who are preferred shareholders in the fund.

While direct mortgage investments typically require a commitment of at least $500,000 to $1,000,000, MICs offer a much lower minimum, making them accessible to a wider range of investors.

“MICs allow investors to access the mortgage investment market through a professionally managed portfolio solution, requiring far less capital and carrying less risk than direct investments in individual mortgages,” says Baker.

He adds that capital preservation is a key focus for CMI’s fund managers, who allocate a monthly cash provision to cover potential loan losses (though these are rare) and ensure there is no impact on distributions. This reserve fund offers an extra layer of protection for the portfolios.

“Our MIC funds have remained strong through various economic conditions, with a solid record of meeting return targets and maintaining steady distributions.”

There’s a difference, too, between MICs and REITs (real estate investment trusts).

REITs invest directly in income-producing real estate, like apartments and office buildings, making them highly sensitive to interest rate fluctuations and real estate market conditions. In contrast, CMI’s MIC funds invest in mortgages secured by residential real estate, earning income primarily from interest payments. Because MICs set their own lending rates, they offer greater predictability—particularly in terms of yield.

MICs offer diversification across factors like mortgage type, loan size, loan-to-value ratio, security position, property type, and geographic location. They cater to a variety of risk and return profiles, offering tailored options to align with specific investor goals and comfort levels.

“Along with being a turnkey solution, this flexibility empowers advisors to integrate mortgages seamlessly into client portfolios,” he says.

A strategy for resilience and growth

CMI is entirely focused on the residential market, which Baker says isn’t as volatile as the commercial market. He reports that yields are often in the range of 7 to 12 percent, depending on the risk profile. Even higher-risk funds provide regular income, typically monthly. “That’s attractive for income-seeking investors like retirees.”

Baker says MICs are also structured to distribute 100 percent of their net income to shareholders, which can be held in tax-advantaged accounts like TFSAs, RRSPs and RRIFs.

Given today’s market dynamics, diversification across asset classes — including alternatives — is essential to building resilience against risk and uncertainty, and adding growth potential.

While some alternatives promote anticipated returns, which may or may not materialize, Baker emphasizes the predictability of mortgage investments “Our track record demonstrates consistent, realized yields, giving investors confidence in the stability of their earnings.”

To learn more about growing opportunities with mortgage investments, visit CMI Financial Group or watch the webinar replay video that aired on Tuesday, April 8, at 1:00 PM ET, to gain insights to help you position your clients for greater success

With women expected to control nearly $4 trillion in assets by 2028, the need for an advisor who truly understands and connects with their clients is paramount. TD Wealth is committed to creating inclusive environments where women feel empowered, confident, and comfortable in discussing their financial goals. This is especially powerful when female advisors, with their own valuable perspectives, can guide clients toward their aspirations.

“Having an advisor who truly understands the unique challenges and milestones women face can make all the difference,” explains Catherine Dangerfield, Associate Vice President, Pacific Region, Wealth Advice, TD Wealth. “Whether planning for retirement, preparing for a family, or building a safety net, these are highly personal choices that benefit from a blend of financial expertise and empathy.”

Empowering Financial Confidence with Understanding

At the core of wealth management is the goal of making finances more approachable and less intimidating for clients. For many women, this means having a judgment-free, supportive environment where they can ask questions and discuss their concerns openly. Ms. Dangerfield highlights that providing this foundation of trust allows clients to make informed choices that bring financial security.

“Finances can seem overwhelming, especially for those who haven’t always been part of these conversations,” says Dangerfield. “A fulfilling part of my work is ensuring financial planning is clear and manageable for clients, ultimately helping them feel empowered.”

TD Wealth advisors support clients at all points in their financial journey, offering guidance that aligns with individual life stages and aspirations. This approach resonates with many female clients who value a more personal connection to their advisor.

“Our advisors help their clients establish clear, personalized roadmaps that reflect their values, whether they’re building a savings plan, or preparing for a secure retirement.”

In 2019, TD Wealth launched their Women Champion Program, and today, with over 300 Women Champions, these advisors are dedicated to providing personalized support and guidance to their female clients, ensuring their financial goals are met with expertise and understanding at every stage of their life.

Addressing Diverse Financial Needs

For many women, financial planning involves much more than building wealth—it’s about aligning finances with deeply held priorities, from career growth to family legacy. Unique life events, like pausing a career to provide care or handling major life transitions, can shape financial planning in distinctive ways.

“Life is full of change, and each significant event often means reassessing financial plans. Our advisors aim to offer support that respects each person’s path and priorities,” says Dangerfield.

This customized approach is particularly beneficial when clients are navigating life’s shifting phases. Advisors at TD Wealth help clients strike a balance between immediate goals and long-term financial health, fostering a sense of stability no matter the circumstances.

Representation Matters in Financial Services

Increasingly, women clients seek advisors who share similar life experiences and can bring empathy to wealth management. According to Ms. Dangerfield, this connection isn’t just about having technical knowledge—it’s about forming genuine, long-term relationships built on trust and understanding.

“Our role isn’t only to provide financial plans; it’s to create lasting relationships. For many clients, knowing that their advisor understands their perspective establishes a deeper level of trust,” explains Dangerfield.

At TD Wealth, women advisors are integral in making wealth management a more inclusive and supportive field. This focus on diverse voices allows TD Wealth to better serve clients by helping to ensure that financial advice is accessible and relatable.

A Fulfilling Career Path in Wealth Management

For those exploring a career in financial services, wealth management offers meaningful work where personal impact is central. “Our advisors help people make informed choices that directly impact their lives,” says Dangerfield. “It’s incredibly rewarding to assist clients, especially women, as they work toward financial security and confidence.”

TD Wealth encourages women in the field by supporting their career growth through ongoing development programs and fostering a collaborative, client-centered environment. By focusing on inclusivity, TD Wealth strengthens both its advisors and the experience it delivers to clients.

Taking the Next Step Toward Financial Confidence

For women ready to take charge of their financial journey, finding a trusted advisor can make all the difference. TD Wealth’s commitment to personalized advice means that women can confidently navigate the complexities of finance with someone who truly understands their needs and ambitions.

From setting up a plan to adjusting it over time, advisors are there to guide and support women every step of the way.

To learn more, connect with a TD Wealth advisor for insights on how to create a secure and fulfilling financial future.

TD Wealth represents the products and services offered by TD Waterhouse Canada Inc., TD Waterhouse Private Investment Counsel Inc., TD Wealth Private Banking (offered by The Toronto-Dominion Bank) and TD Wealth Private Trust (offered by The Canada Trust Company).  ®The TD logo and other TD trademarks are the property of The Toronto-Dominion Bank or its subsidiaries.

Securing financial stability is a sought-after goal for every Canadian. But data indicates this goal is further and further away for more Canadians. According to a 2023 study conducted by the Life Insurance Marketing and Research Association (LIMRA), nearly half of Canadians say they aren’t financially secure enough to weather the death of a primary wage earner, and more than 43% of Canadians say they are very concerned about saving enough for retirement.ⁱ

“Advisors play a really important role in informing, educating and inspiring Canadians with sound guidance and custom solutions to help ensure they are financially stable,” explains Paul Savage, Head of Insurance at Manulife Canada. “When a proper plan is in place, coupled with the right products, clients feel assured that they are prepared to navigate unpredictable moments that may come their way.”

But for the 74 per cent of Canadians who say they are either uninsured or underinsured,ⁱⁱ securing financial stability is more than a goal, it is essential.

For underinsured Canadians, competing financial priorities like the rising costs of food, housing, and daily expenses can be overwhelming. These everyday pressures can make it difficult to consider insurance, yet a critical event could threaten to tip the balance. “When someone faces a difficult scenario, such as a critical illness, insurance can provide financial stability so they can focus on healing – both physically and emotionally,” says Savage. “Insurance gives people the option of putting their health first, which is a gift.”

The 2023 LIMRA study also found that 31 per cent of underinsured Canadians said the reason they don’t have life insurance is due to having other financial priorities.

There is a misconception that insurance is expensive, but premiums aren’t as high as many people think, Savage stresses. “Insurance can be affordable – it’s simply based on a person’s needs and advisors can work with clients to find protection that fits any budget. It’s much better to have some kind of protection than none at all,” he says.

He points to another approach for Canadians to save on their premiums. The Manulife Vitality program encourages policyholders to engage in healthy activities, such as exercising, eating well, and undergoing regular health screenings, in order to earn points towards lowering premiums by as much as 15 per cent. “This unique offering helps clients improve their long-term health, while giving them control over their insurance costs,” adds Savage. Vitality can support advisors in deepening relationships that may have previously been only transactional, which in turn results in earning more trust with clients.

The program is popular with clients, earning an 82 per cent satisfaction rateⁱⁱⁱ and positive feedback on how valuable the rewards can be in terms of discounts on various brands like

Apple, Adidas®, HelloFresh™ and more, while offering motivation to boost their longevity and improve overall well-being.

Newcomers to Canada can also require guidance to find the ideal insurance policy to suit their needs, Savage says. It can be challenging and overwhelming for newcomers to navigate our financial, healthcare and tax systems, but with the help and guidance from advisors, those obstacles can be hurdled with ease. “Advisors can add value by acting as a conduit to these systems and figuring out what they have in place already, such as lawyers and accountants, and providing holistic financial planning,” he says.

Savage stresses how flexible solutions can be attractive to clients from any financial position. What can begin with a term policy can end up shifting to a permanent policy. “Purchasing term insurance at a young, healthy age allows individuals to secure coverage now, with the flexibility to convert to more permanent solutions if their health changes over time,” explains Savage. “The key is to find the right solution for you and your family. Collaborating with a knowledgeable advisor ensures you are well-prepared to navigate life’s uncertainties with confidence and peace of mind.”

ⁱLIMRA: https://www.limra.com/en/newsroom/industry-trends/2024/nearly-one-third-of-canadian-adults-report-living-with-a-life-insurance-coverage-gap/

ⁱⁱLIMRA: https://www.limra.com/en/newsroom/industry-trends/2024/nearly-one-third-of-canadian-adults-report-living-with-a-life-insurance-coverage-gap/

ⁱⁱⁱProgram member data as at February 28, 2021.

In the ever-changing world of insurance, advisors are facing mounting pressures to sustain their businesses and provide clients with holistic advice and personalized service. Canada’s evolving regulatory environment, heightened competition, increased administrative demands, and ongoing geopolitical and macroeconomic uncertainties all contribute to the challenge. In this climate, advisors are seeking ways to prioritize what truly matters: building meaningful connections with their clients.

“In speaking with advisors across Canada, we know they are looking for innovative products and solutions that will help differentiate them and set them apart,” says Paul Savage, Head of Individual Insurance, Manulife Canada. “We’re hearing that advisors are looking for more. Providing products is no longer enough – they want help forging lasting relationships with clients by delivering solutions that offer value throughout their life.”

Manulife’s Vitality program is designed to do just that.

Backed by behavioural science and the only program of its kind in Canada, Vitality gives clients helpful tools, as well as access to the latest technology, resources, and rewards, to help them live longer, healthier, better lives.

Manulife Vitality is designed to encourage policyholders to take small, everyday steps toward better health through a robust framework of rewards and incentives. Participants earn points by engaging in a variety of health-promoting activities such as exercising, undergoing regular health screenings, and even receiving vaccinations. These points translate into tangible rewards like premium discounts,¹ gift cards, and reduced gym memberships.

But why is promoting client health so crucial for advisors?

“For advisors, Vitality is more than an incentive-based rewards program. It offers them the opportunity to connect with their clients on a deeper, more personal level,” explains Karen Cutler, Chief Underwriting Officer, Manulife Canada. “The Vitality program is a game-changer for both clients and advisors. It transforms the traditional insurance model by incentivizing healthy living, which, in turn, helps Manulife manage risk while enhancing client satisfaction.”

With Canada’s healthcare system under strain and over six million Canadians lacking access to a primary care provider,² supporting client health is more critical than ever. In just one year,³ Manulife Vitality members who had out of range results saw an 11 per cent improved of Body Max Index (BMI) into a healthy range; 26 per cent improved glucose readings; 21 per cent improved cholesterol and 31 per cent improved blood pressure.

For advisors, Vitality provides access to a broader market of customers, with flexible engagement options defined by clients and their unique needs. And it is paying off. A recent survey found that more than two-thirds of advisors say Vitality helps them differentiate from the competition, and more than half of advisors say the program helps them deepen, retain and expand their relationships with clients. Additionally, three out of four advisors agree that Vitality provides them with new opportunities to interact with their clients.⁴

“It’s a win-win,” continues Cutler. “Clients are motivated to improve their health, and in doing so, they can not only extend their life expectancy but can also reduce their insurance costs. Advisors, in turn, benefit from increased client engagement and loyalty.”

Boasting an 82 per cent satisfaction rate,⁵ Vitality continues to impress clients and gives advisors the confidence to recommend this unique product to Canadians who are finding new and exciting ways to improve their physical and mental health.

“As we continue to move towards a future where health and financial security are increasingly intertwined, Manulife Vitality stands out as an innovative disruptor in a crowded marketplace,” says Savage. “By encouraging healthier lifestyles, we are not only transforming the way we think about insurance, but empowering individuals to take charge of their well-being. Vitality is more than just a program—it’s a commitment to a longer, healthier and better life.”

Learn more at manulife.ca/vitality

¹ Available on select policies.

² https://www.thestar.com/news/canada/6-5-million-canadians-dont-have-a-family-doctor-senators-say-their-plan-can-deliver/article_c57cd9c8-7f4b-11ef-99d9-23c64de6bf90.html

³ Verified by Vitality Health Check of Manulife Vitality members who had readings in 2019 and 2020 

⁴ Source: Manulife individual Insurance Advisor, Environics Research, July 2022

⁵ Program member data as at February 28, 2021