Somewhere around the middle of April every year, I get a version of the same call. An investor looks at what he earned, looks at what he actually kept, and asks me why he is holding an asset taxed at his top marginal rate when there are equity strategies out there promising capital gains treatment.
Here is the direct answer. You are trading a tax rate for a schedule. For most of the people I work with, the schedule is worth more than the rate.
The Trade You Are Actually Making
Interest income from a mortgage fund is ordinary income. I am not going to dress that up.
What you get in exchange is income that shows up when you expect it, in an amount you could have estimated before the year started. Chasing capital gains treatment usually means accepting an exit event you do not control and a return that arrives in lumps, if it arrives at all. That is a reasonable trade for part of a portfolio. It is a very hard one to build a tax plan around.
Mechanically, here is how ours works. Earnings compound monthly. You elect how you want them — paid quarterly, semi-annually, or yearly, or left in to compound with no required distribution. Notice what is not on that list. We do not pay monthly. Monthly compounding and a monthly check are two different things, and only one of them is ours.
You Can Only Plan for What You Can Predict
This is where predictability earns its keep.
Many of our partners hold their Fidelis position inside a Self-Directed IRA or a Solo 401(k). Others use the consistency of the income to time Roth conversions, or to size estimated payments without guessing, or simply to know what their April looks like in the previous October.
None of that works on an asset that swings. You cannot schedule a conversion around a return you cannot forecast. Whether any of these structures fit your situation is a question for your CPA, not for me — but every one of them starts with the same requirement: a number you can count on.
The Engine Behind the Consistency
Predictable income is not a personality trait. It is an operating discipline.
We originate and underwrite every loan in-house. That is the decision we will not hand to anyone else. Servicing — collections, escrow, reporting — runs through a trusted 3rd party loan servicer, which keeps the administration professional and keeps our attention on credit.
Our published loan-to-value ceilings are 60 to 65 percent on commercial and 65 to 75 percent on residential. The weighted average across the current book is below 60% — inside our own ceiling. It is worth saying plainly why that matters right now. Banks eased standards on commercial and multifamily lending this summer, coming off a historically tight base. The direction of travel is looser, not tighter. Nothing in this market is forcing us to lend at 57 percent. We do it anyway.
Since inception, we have had zero real estate owned through foreclosures. Q2 2026 investor return came in at 9.31 percent net annualized, and we have run over 8 percent annualized since inception.
Fixed income strategies should be boring. Boring is the product.
The Bottom Line
The best after-tax outcome is not always the investment with the friendliest tax label on it. More often it is the one you can plan around, held in whatever structure your CPA tells you to hold it in.
We are not trying to sell you a fund. We are trying to be the piece of the portfolio you do not have to think about.
Let’s talk.
I am not hidden behind gatekeepers. I answer my own phone. Call me at 760-258-4486 or email me at jlloyd@fidelispf.com — I want to hear your story, and I am glad to walk through the numbers with your CPA on the line. The best partnerships start with a simple conversation. No pressure, just clarity.
Fidelis Private Fund annualized yield paid to Limited Partners for the 2nd Quarter 2026. Click here for a summary of Fidelis’s annualized yield since inception.