[Bunny]

Hello all

I've recently taken my portfolio to another financial advisor for a second opinion. The "new" advisor suggests I reallocate many of my current investments (GIC's, bonds, managed mutual funds) into ETF's and some stock - namely income trusts. I'm ok with the ETF advice but wonder if going to income trusts is a good idea as I've heard the legislation will change in 2011

Some of the trusts he recommended are KEY.UN, PMT.UN, RSI.UN, WTE.UN, CUS.UN, LIQ.UN, DHF.UN, CLC.UN etc.

Any thoughts on this?

 

[DavidJD]

Another great stock is EIF.U it was an income trust but has already converted to a corporation - no worries about their income trust exit strategy. It is trading at $12 today, pays $0.13/month and is managed by a really impressive staff (former Premier of Manitoba and other captains of industry they specialize in manufacturing and avaition in N. Manitoba and Nunavut. I can't seem to resist buying more of these units when I compare to other income trusts or dividend paying stocks. When I compare I decide to buy more EIF my main concern now is lack of diversity in my portfolio, this is offset by the problem of cash being dumped into my account each month.

 

[leslie]

Sounds like you told him/her you wanted lots of 'income'. You get what you ask for.

 

[HaroldCrump]

they specialize in manufacturing and avaition in N. Manitoba and Nunavut. I can't seem to resist buying more of these units when I compare to other income trusts or dividend paying stocks.

Manufacturing and aviation paying almost 8% yield is not realistic or sustainable, IMO.
Aren't these industries in the dump right now?
Have you done your due research on this income trust?
Are you sure it's not mostly a return/re-cycling of capital or even a Ponzi?

 

[scomac]

Sounds like you told him/her you wanted lots of 'income'. You get what you ask for.

The heck of it is there is no guarantee what level of income you will get post 2011. That said, a trust is just of form of business organisation. It's neither inherently good nor inherently bad. That will depend on the individual business. Some will be good, others...well......you get the picture. In 2011 (or before) most of these will convert back into corporations. Some will pay dividends, some might not, so you will need to determine what management plans to do in this regard. Maybe you should be asking this advisor just what information he/she has with respect to the various trusts he/she is recommending and the proposed courses of action of the respective management teams.