Investors who are looking for ways to maximize gains and minimize risk over the long term should adopt a diversified portfolio that combines multiple asset classes that have low correlation. Real Estate is considered one of the best-performing, non-correlating asset classes an investor can combine with stocks, bonds and commodities. Among real estate investments, private lending mortgage funds are a viable option for these reasons:




1.- Private lending funds offer a higher security of principal




Fund managers control their exposure to risk through due diligence. They also can hedge against default by holding property as collateral at low leverage and can assure likely profit in the case of a default through comprehensive underwriting that transfers all risk to the borrower.




2.- Private lending funds offer high rates of return




Borrowers are willing to pay higher interest rates in return for a more expedient availability of funds than traditional banks can offer.




3.- Private lending funds round out a diversified portfolio




They possess a low correlation with traditional asset classes, such as stocks, bonds and commodities. Stock market fluctuations typically have little or no effect on the profitability of these funds. The number of borrowers seeking private mortgage loans in economic downturns may increase as competition for real estate bargains intensifies, which can only be good for investors.




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