Depending on its asset mix, mortgage trusts are generally a lower-risk investment than equity funds, and can offer superior, more predictable returns. They provide diversification to traditional equity and fixed income portfolios, and are a means to participate in real estate markets without directly investing in property.
A mortgage trust is a diversified pool of mortgages that can hold conventional mortgages, including residential, industrial, and commercial, both first and subsequent-security, and CMHC-insured mortgages. The trust might also invest in government bonds or hold cash. The objective of mortgage trusts is typically to provide relatively high yields while preserving underlying capital.