Why you should look to Mexico for diversification

Firm emerges from shadows of institutions to offer investors and advisors alternative option in North American real estate

Why you should look to Mexico for diversification

Canadian investors are being given the chance to diversify their portfolio through rare exposure to the Mexico real estate market.

Previously the sole domain of institutional behemoths – in particular pension funds – Calgary-based ICM Asset Management is the first private investor outside of that realm in Canada to offer this opportunity.

Available through advisors, and requiring a minimum investment of $5,000, the ICM Property Partners Trust fund also features real estate in the US and Canada, with 30% allocated to Mexico.

Its total target returns are 9-12% depending on the series and DRIP strategy selected, while management fees range from 1.40-1.90%. It is RRSP and TFSA eligible.

John Courtliff, partner, managing director and portfolio manager, said: “We’re really big believers in the macro picture in Mexico from the real estate perspective. Demographics are very significant drivers as well as underlying economic reforms, and underlying economic performance on a nominal basis has a lot to do with population growth.

“If you look at Mexico, it has the youngest population in the world – 50% of its population is under the age of 28 and if you compare that globally, the only other country that is close is India and that’s just a more challenging environment for a lot of reasons.

“But Mexico, being our southern neighbour and a part of North America is familiar enough that we are comfortable with our ability to operate down there and it’s not too far away to get to if needed.”

Courtliff added that ICM strongly backed Mexico’s long-term economic prospects, with studies predicting that by 2050 it will be the seventh largest economy in the world, overtaking the UK, France, Germany and Japan.

“It’s growing and we believe in that growth story. If we really like the demographic profile and we think it’s got a really great future, we want to be a part of that.”

The fillip for advisors, Courtliff said, is that it gives them access to a genuine alternative investment and that ICM will actively move the portfolio out of any areas that aren’t performing.

He explained: “If you look at most real estate funds that are available to advisors, they are very geographically allocated to a single city or a single region or country – and that means the advisors need to be continually watching their holdings in any market.

“What we do and because of our breadth of experiences and where we have boots on the ground, we make those calls for investors and advisors so they know that if the economy in southern Ontario changes dramatically, we will move the portfolio out of southern Ontario to reflect that.”

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