RBC is constantly evaluating new investment trends and ideas so that we can help our clients achieve their savings goals. One type of investment structure that receives frequent attention in the press is the Canadian income trust. On August 28th 2006, RBC Asset Management announced the launch of the new The RBC Canadian Diversified Income Trust Fund.
The RBC Canadian Diversified Income Trust Fund provides access to the investment opportunities in this unique segment of the Canadian equity market. The Canadian income trust market is complex and constantly evolving. The RBC Canadian Diversified Income Trust Fund is guided by an experienced team of portfolio managers, who currently manage over $2 billion in income trust investments across the RBC family of funds.
Income Trusts
Income trusts currently represent approximately 10% of the S&P/TSX index – a significant part of the Canadian equity market. As income trusts have gained popularity, with both investors and companies looking to go public, the number of different businesses structured as income trusts has risen.
Many investors are attracted to the wide variety of businesses in the income trust market. Income trusts can provide stable tax-efficient monthly cash flow with the potential for capital appreciation. Income trusts provide additional diversification opportunity within a portfolio, as well as exposure to an important established market segment that continues to grow.
Why the RBC Canadian Diversified Income Trust Fund?
As with all investments researching the company you plan to invest in is important, and this especially true for income trusts. All income trusts are not created equal. For many investors, having the time and desire to do the research is not feasible. Investors who choose a trust that lowers their distribution rate can expect not only a hit to their monthly cash flow, but also a decline in the market price of the trust, which could result in a losing investment.
Choosing the RBC Canadian Diversified Income Trust Fund, provides investors with access to this important aspect of the Canadian equity market,
Who is this fund appropriate for?
Investors who’re are looking:
- For stable, tax-efficient, monthly cash flow
- For diversified and professionally managed exposure to the income trust market
- At a long-term investment horizon and can tolerate medium investment risk
The fund seeks to generate a relatively high level of stable monthly cash flow, with modest capital appreciation over time. In addition, it looks to provide tax-efficient distributions in the form of interest income, dividends, return of capital and capital gains. The unit launch price is $17.50, with a competitive target cash distribution rate of 5.5%, based on a monthly distribution of $0.08 per unit.
