Management of the MIC must be vigilant and selective with whom they lend to, and investors can inquire about whether the MIC in question will allow investments within various percentage brackets ranging from low to high risk. This option would provide investors with the opportunity to select an investment according to their level of risk (this option does exist with certain MICs). Also, investors that are researching potential involvement in MICs should be aware that there are some MICs in limited markets, such as smaller towns, that concentrate on specific industries. Considering the location, economy and possible market downturn is essential for investors to decide if they feel that risk is not an option.
However the Benefits of Investing in a MIC include:
- Excellent potential for dividend distribution;
- The extenuation of potential risk by the ample participation of investors;
- The adherence to legislative expectations by the MICs professional management team and the careful continuous consideration of the Credit Review Committee;
- Furthermore, shares are typically redeemable in certain prescribed circumstances and may be retracted at any time provided that the fund has the capital capacity to make the redemption; and
- An additional benefit to MICs is the security provided to investors with annual audits of financial statements to ensure accountability of finances and safety against fraud, including financial reporting to shareholders every month.