Salt Lake Telegram | 1929-09-29 | Page 12 | Mortgages Yielding Highter Return than Stock, Bond Issues

Yield Yielding ng iii Higher r Return Return Than Stock 1 Bond fl I Issues I II issues of of- Insurance Companies Give GiveL L Them e Edge on 01 Earnings of or life comp nl now totaling havi hai on el ot f the great eat factors factora In n th the Investment field Be Became of the thela clary la character of these then funds their Investment must be e made mad with ury t to safety fety of the Inv Investment Because of cf the thu tremendous Io Involved In life Insurance fu funds d. d and because of the necessarily live character of life Insurance company Investments the made from the published reports of leading JIe Insurance com corn I ta bec becomes rne mes of Interest to every Individual Investor mortgage e investments of at 1 1 4 life iris insurance t c corn com m esin in in the United States in 1928 yielded an n average rate t rn which was O. O 2 per cent higher than the ilie average of f stock and bond holdings of the s same le companies ac- ac ng g to a study tudy made made b by t the le National National Association ion of o Re Real 1 t Boards detailed findings o of which will be published In in Ss annals of real state estate practice for 1929 The Int nt nS volume of the annals is expected t to co come e f from m the Mate in Novem November er I study is Js based upon figure ures' public in hi Bests Best's Life LUe Incur Incur- leports published b by the Al AlU Al- Al U If Best company compAn j whoso earnIngs earning are the 10 1 leading Mile niec complete text o of tho the report tf The Th report will be bo ac ac- ac ni d in hi the annals witha de de- de o of the data from its t findings were taken in infer In- In f fer r r. each aeh o of the 10 1 cornS com com- S statistics statistics' as to their total tola tied assets total mortgage in in- U. U total Investments Investments' in InI I and bonds and gross ross rate of oC no each ench typo type of oC Invest Invest- S f iGE GE RETURN u avera rage yield on mortgage Mints ints t. t of all the Ithe life Hta insurance InsuranceS e enl S nl Included les Included in the stud study for fori forr r 51 1 i 60 per cent whereas as the I return on stock and bond bonds s of these thes companies was wa In a 1927 7 the n e average g e eCI CI on mortgage loans w was s int nt nt whereas on stocks and Ill I'll W Was was as 4 per cent In rn 1926 companies companies' co les mortgage Invest- Invest yielded an average return of r V cent cint while the average re rein ren re- re in n their stock holdings was r cent werring to table 1 and the pi diagram m It will be that the tM average e yields Ields o of n b bonds as well wen as ns the 4 ie fe yields on mortgages held b by insurance companies since 1925 been lower Jower ower than they were AC the preceding five years ears ble Comp 1 Comparison of the aver aver- Ji rates pf income earned by byrance rance rice c companies on mortgages to ond 1916 1915 1928 t A arc Oroff rt s canted so o go o g gf e e ez z f i fn S SU i t t- t tS' tS e S' S U i g c. c S S u f. f JT IT II an 7 89 n nIU tS I IU n 78 H 1507 07 I. I 04 I 1 U 1 S 13 iT SI IT 11 1 I I 01 OI 4 SG S 5 4 5 S IU 43 1 i Sa eu t IU 47 7 5 4 IU 49 IU erto 0 1323 1925 t the e yield J ld on mort mart the earnings of at with wHIt stocks tock and bonds r w e should not nor not overlook ri Important Portent distinction Ti tb W l t tUU the figures s represent represent- e volume volum of ot Insurance com corn In stocks and do do not mean ia the sums sums paid He eee e li securities but represent l or for w whIch the company f V In i most stances this t stocks stok and alId bonds arc 4 lr the thc or of f the com corn current market value I gages ages gages only oly ori on once f fell below 6 II per percent percent cent in the year 1919 Since 1925 the tIle yield on on n mortgages has been less less' than 6 per cent in each of ot the Hie three years years years' for which data are ara available On th the thc other hand it should be pointed out that the that that the yield yeldon on stocks and bonds has hasi been under wider G per per cent as hs far back backas as this study goes with ith the exception n of the and 1925 when thc stocks s and bonds show Dhow av average rage yields Ields of r 5 01 per c cent nt and per cent cent re sp PREFER EFER MORTGAGES The fact that Insurance com corn com panics up ui to the end of or last year showed a strong preference for mortgage loans as compared with fth sto stocks ks' ks and arid bonds Js Js Illustrated in table 2 2 in which the Ule number of life Ue Insurance o con companies s whose hose mortgage mortgage mort mart gage loans Joans have shown a a greater absolute I increase n re are compared with the number o of companies whose h holdings in stocks and nd bonds have increased ed more rapidly than thanS their Investments In mortgage J i Joans s since 1925 In making this tabulation tabulation tabulation tion the absolute numerical Increase In figures representing mortgage mortgageS loans wu was compared with the fIgures figures fig fig- ures representing representing holdings holdings of stocks and bonds If It the figure representing represent represent- ing mortgage loans showed a a greater renter absolute increase increase- since 1925 than han the thc figures representing holdIngs holdings hold hold- ings o of stocks and bonds tho company com corn pany was classified in the c column o of table 2 headed Number of ot com com- whose mortgage lie loans have increased mor more than holdings In stocks and bonds since 1925 1926 On the other handI ha hand dif if the figure representing representing holdings of ot sto stocks ks' ks and bonds showed ro n. a greater absolute Increase in increase In- In crease than the thc figure representing mortgage loans the company was vaa classified in tho the column headed beaded Number whose hold hold- Ins ings in stocks and bonds have in increased In in- creased d more more than their Invest 1 ments in mortgage loans Joan since 1926 1925 I Of Ot of the companies In inthIs n this classification th the figures for Cour four companies indicated a a greater absolute Increase In mortgage mortgage mort mort- gage age Io loans s t than tan an holdings in stocks and bonds Table 2 Grouping o of life Insurance ance nce companies on on the basis o of the amounts mounts invested Jh jn in mortgage e loans or r stocks n and l bonds In 1928 as compared with 1925 14 P 7 75 5 o g jE e 4 0 I. I 0 o 2 1 Q 3 3 J a 3 s 0 Co I j I 0 III P S 1 g a 5 Ie m 1 74 4 7 7 I 3 2 5 37 11 l 10 0 1 y 17 14 4 J C 1 U I 1 3 14 10 o 7 If 7 S fi GS 3 I I Central 6 5 S 5 S Ii 5 3 3 5 5 I I 7 7 g 5 I of or these Accordingly an increase in tho amount of money in invested invested In in- vested ested in these securities even oven though no additional 1 Inv investments in fn stocks and bends had tak taken n pla place e. e In o other words the he volume of mortgage age loans represents much moro more accurately the actual Inv Investments investments invest Invest- st- st ments menta of or iDs insurance rance companies r pl than do the ff figures showing their holdIngs holdIngs hold- hold Ings In stocks and bonds Table Table- abl 3 S i invested I t d In mortgage loans loans' and In stocks and bonds by sIx leading companies in 1925 and S U 1 1321 Amounts Amo nt A Amount Amo Amounts 5 rested pi-rested B Hold In r rIn Holding In In Stock Stacks In In In Stocks block and lind nd Bond and Jond 1 0 f I 06 I i t Co ILIr iH k 1114 Irk C c. c 4 ritt tate tate- III Co Lite 1 lUnO e I l' l a JO f S TL Table le 3 aho shows lI lh the investments in mortgages mortgage as s compared with holdings hold hold- ld- ld h ings of stocks t c s' s an and bonds o of df t tie e six largest est Insurance c companies p iel in I 1928 1128 as ns compared with h 19 1925 5 Five Jve IV of six h companies a acon a considerably con con- I greater proportional lonal- lonal in increase In- In crease in In mortgage loans loans' than Inh in h holdings of st stocks stocks' and bonds The Th only oly exception I In 15 th the tho Aetna Life In Insurance In In- company whoa hoso holdings in st stocks stOck and bonds were nearly nearh d doubled from roIn 1925 to 1928 1920 but whose Inv Investments in mortgages show a D. small dt decline lIn