Monday Market Minute | Nov 25, 2019

MIC sector approaches year-end with steady performance and growing AUM

What Moved

As 2019 drew to a close, the Canadian MIC sector reported a strong year across key metrics. Aggregate assets under management grew approximately 12%, driven by both new subscriptions and portfolio growth. Distribution rates remained stable, with major MICs including Romspen maintaining yields in the 6-8% range. Delinquency rates held below 2%, and the housing market recovery improved collateral values across most portfolios. No significant credit events emerged during the year.

Why It Matters

The MIC sector's 2019 performance confirmed its role as a reliable income-generating allocation within diversified alternative portfolios. Through rate hike uncertainty, housing volatility, trade war panic, yield curve inversions, and election anxiety, MICs delivered exactly what investors expected: steady monthly distributions secured by Canadian real estate. The consistency of returns — low single-digit volatility with high single-digit yields — differentiated the asset class from both public fixed income and equity-linked alternatives.

Signal to Watch

Year-end valuations of underlying real estate collateral would determine the sector's true risk profile entering 2020. Improving property values in Ontario and stabilizing values in BC suggested the collateral cushion was strengthening — a positive development for the risk-adjusted return proposition.

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