interest income, but coming to you in tax-advantaged form
the Marret high yield income trust is an interesting new product, one of a small group of interest-bearing investments whose income gets paid out to beneficial owners in tax-advantaged ways. Not madoff or stanford or earl jones ways, but legit ways.
MHY.UN will hold derivatives of a portfolio of high-yield corporate bonds held by a counterparty. Issued a few weeks ago at $10, MHY.UN was pegged to return 8% mostly in the form of return of capital, which is not taxed when received but serves to lower the cost base of the security, becoming taxable as capital gain or loss only upon sale of the security. MHY units are presently trading on the TMX at about 10.30, which reduces the yield somewhat but still places it at double the yield of a 100% taxable GIC. There is a premium to NAV because of sustained demand.
Marret managers, several of whom are former Altamira bond specialists, are also looking at the historically very high spread between high-yield corporate bonds and their low-yielding distant cousins, the government treasuries, expecting that this spread will eventually resolve back down to normal levels as corporate bond yields drop and their prices rise.
the MHY.UN IPO issue was large at $215 million. There has been little publicity. The best description, in fact the only description, is the excellent prospectus available through a link on Marret's home page.
a major risk would be failure of the counterparty. In today's climate, as we approach labour day 2009, one cannot see this happening. Nevertheless the exchange tradeability of MHY is an attractive feature.
MHY.UN will hold derivatives of a portfolio of high-yield corporate bonds held by a counterparty. Issued a few weeks ago at $10, MHY.UN was pegged to return 8% mostly in the form of return of capital, which is not taxed when received but serves to lower the cost base of the security, becoming taxable as capital gain or loss only upon sale of the security. MHY units are presently trading on the TMX at about 10.30, which reduces the yield somewhat but still places it at double the yield of a 100% taxable GIC. There is a premium to NAV because of sustained demand.
Marret managers, several of whom are former Altamira bond specialists, are also looking at the historically very high spread between high-yield corporate bonds and their low-yielding distant cousins, the government treasuries, expecting that this spread will eventually resolve back down to normal levels as corporate bond yields drop and their prices rise.
the MHY.UN IPO issue was large at $215 million. There has been little publicity. The best description, in fact the only description, is the excellent prospectus available through a link on Marret's home page.
a major risk would be failure of the counterparty. In today's climate, as we approach labour day 2009, one cannot see this happening. Nevertheless the exchange tradeability of MHY is an attractive feature.
1 - 6 of 6 Posts
The distributions will not be based on profits or income earned withing the fund ("based upon the Manager’s estimate of distributable
cash flow"). Cash can be generated most easily by selling positions. They say they require "additional returns of approximately 5.22% in excess of its current cash yield .... through the sale of securities or other returns" - whatever that means.
Yes, they say they have bought a forward contract to cover the principal value of the eventual redemption, but they can pre-sell it (cashout) 'to fund monthly distributions on the Units". In other words you will just be getting your own principal back, and shrinking the NAV.
Credit spreads have narrowed A LOT since they determined "Credit spreads of High Yield Debt are near historically high levels".
I stopped reading after a few pages. Not for me.
cash flow"). Cash can be generated most easily by selling positions. They say they require "additional returns of approximately 5.22% in excess of its current cash yield .... through the sale of securities or other returns" - whatever that means.
Yes, they say they have bought a forward contract to cover the principal value of the eventual redemption, but they can pre-sell it (cashout) 'to fund monthly distributions on the Units". In other words you will just be getting your own principal back, and shrinking the NAV.
Credit spreads have narrowed A LOT since they determined "Credit spreads of High Yield Debt are near historically high levels".
I stopped reading after a few pages. Not for me.
i do believe that you stopped reading after the first few paragraphs of the introductory front matter that precedes the actual prospectus itself.
that is, you stopped when you came to the paragraph that recited:
"Marret believes that the credit cycle is in the late stages of Phase III and will enter into Phase I in the near future (see “The Offering —
Investment Rationale”). As a result, the portfolios of Marret High Yield Hedge Limited Partnership (“Marret LP”) and Marret Fund Ltd. (see “The Portfolio – Portfolio Composition”) have a significant allocation to cash and a current cash yield of approximately 5.24% per annum."
had you read the prospectus itself, on page 15 you would have come to the detailed explanation of what Marret means by their Phase I-III model. This model accounts for the cash holdings at this point in time, which are indeed yielding less than the projected distribution.
again according to the prospectus - and i have no reason to doubt the veracity of this document at this moment - the Marret managers are now exiting Phase III and shifting their investment stance into Phase I. That is, they are deploying cash into the long bond strategy as described in the extract below.
if their model has merit, this is the phase when total portfolio return will exceed the projected 8% distribution, thus compensating for any shortfall during the first few months of operation.
a prospective investor should bear in mind that MHY.UN is appropriate only for those who agree with the Marret phased approach to high risk debt markets.
(from the prospectus, page 15)
Investment Strategy
.
The specific strategy employed by Marret from time to time in managing the Portfolio will depend on the phase of the credit cycle. In Phase I, Marret HYS Trust would adopt a long bias, with the return expectations being the greatest. In Phase II, Marret HYS Trust would have a neutral bias, with capital structure arbitrage (long debt/short equity) becoming the dominant strategy. Finally, in Phase III, Marret HYS Trust would be expected to have a greater allocation to cash, with derivative and shorting strategies being used to generate positive returns. In Phase III, Marret may short CDX North
America High Yield Index, which is widely used to hedge High Yield Debt portfolios.
.
Through all phases of the credit cycle, Marret will employ hedging strategies designed to protect the Portfolio against the risk of losses from currency fluctuations, interest rate changes and market declines. In addition, Marret may employ derivative strategies to invest indirectly in securities or financial markets, provided the investment is consistent with Marret HYS Trust’s investment objectives. Marret intends to hedge the majority (and not less than 75%) of Portfolio investments denominated in foreign currencies to the Canadian dollar.
.
Marret HYS Trust will also engage in short selling of securities that Marret believes to be overvalued, thereby offering the potential for gains as well as limiting the overall credit risk exposure of the Portfolio investments. The degree of short selling will depend on the phase of the credit cycle. In some cases, the equity securities of a company may be sold short to hedge a long position of the same company’s High Yield Debt. Marret believes that this is an effective hedging strategy, since deteriorating company fundamentals hurt the equity securities of a company more than the High Yield Debt, which tend to be protected by legal covenants and have a more senior claim on the company’s assets.
that is, you stopped when you came to the paragraph that recited:
"Marret believes that the credit cycle is in the late stages of Phase III and will enter into Phase I in the near future (see “The Offering —
Investment Rationale”). As a result, the portfolios of Marret High Yield Hedge Limited Partnership (“Marret LP”) and Marret Fund Ltd. (see “The Portfolio – Portfolio Composition”) have a significant allocation to cash and a current cash yield of approximately 5.24% per annum."
had you read the prospectus itself, on page 15 you would have come to the detailed explanation of what Marret means by their Phase I-III model. This model accounts for the cash holdings at this point in time, which are indeed yielding less than the projected distribution.
again according to the prospectus - and i have no reason to doubt the veracity of this document at this moment - the Marret managers are now exiting Phase III and shifting their investment stance into Phase I. That is, they are deploying cash into the long bond strategy as described in the extract below.
if their model has merit, this is the phase when total portfolio return will exceed the projected 8% distribution, thus compensating for any shortfall during the first few months of operation.
a prospective investor should bear in mind that MHY.UN is appropriate only for those who agree with the Marret phased approach to high risk debt markets.
(from the prospectus, page 15)
Investment Strategy
.
The specific strategy employed by Marret from time to time in managing the Portfolio will depend on the phase of the credit cycle. In Phase I, Marret HYS Trust would adopt a long bias, with the return expectations being the greatest. In Phase II, Marret HYS Trust would have a neutral bias, with capital structure arbitrage (long debt/short equity) becoming the dominant strategy. Finally, in Phase III, Marret HYS Trust would be expected to have a greater allocation to cash, with derivative and shorting strategies being used to generate positive returns. In Phase III, Marret may short CDX North
America High Yield Index, which is widely used to hedge High Yield Debt portfolios.
.
Through all phases of the credit cycle, Marret will employ hedging strategies designed to protect the Portfolio against the risk of losses from currency fluctuations, interest rate changes and market declines. In addition, Marret may employ derivative strategies to invest indirectly in securities or financial markets, provided the investment is consistent with Marret HYS Trust’s investment objectives. Marret intends to hedge the majority (and not less than 75%) of Portfolio investments denominated in foreign currencies to the Canadian dollar.
.
Marret HYS Trust will also engage in short selling of securities that Marret believes to be overvalued, thereby offering the potential for gains as well as limiting the overall credit risk exposure of the Portfolio investments. The degree of short selling will depend on the phase of the credit cycle. In some cases, the equity securities of a company may be sold short to hedge a long position of the same company’s High Yield Debt. Marret believes that this is an effective hedging strategy, since deteriorating company fundamentals hurt the equity securities of a company more than the High Yield Debt, which tend to be protected by legal covenants and have a more senior claim on the company’s assets.
Just curious, how much interest income are you pulling in to begin considering this? For my wife and I, we don't seem to have a lot of interest income.
抽中帕加尼（钛合金），第二次翻牌，第四张牌中 中兽牙大脚怪，第一次翻牌，第二张牌中 晚上，第二次翻牌，第三张牌中布迦迪 第一次翻牌，200点中法拉利 第一次翻牌，200点中勒芒标志908，大奖蝙蝠在第一张牌 当然了，幻影，RSQ运动版这种高档车，抽中的人极少，盛大也不会让你花个几百点就轻易中了，我观察了一下，大家中的也就是这么几个车： 08法拉利，布加迪靓蓝，蝙蝠俯冲，法拉利，雷诺，毁灭，兽牙大脚怪，帕加尼，宾利欧陆飞驰，宾利欧陆GT-墨绿. 抽奖：第一要会选牌，看牌，猜牌，第二看运气，这两点很重要，还需要耐心！有付出就有回报，一样的道理，试试就有机会，不去尝试没机会.其实，抽奖，运气，耐心，你抽得多了，既有经验了，熟能生巧，就这么简单，心态放平 盛大的系统，估计每天有个上限，从00：00-24：00，系统可能会规定出多少大奖，超过这个数字，可能就没了，当然了，这是我的推论。 在游戏里面，有2种人会中车:1，经常抽奖的人，他花费多，前面的N次可能不中，但后面一定会中个车。2，偶尔抽奖的人，花费不多，也没抱着非要中车的心态，只是为了好玩，中1-2个车正常。 大家都想在百宝箱中好车，以下是个人观点： 百宝箱抽车分析，仅供参考，如果大家有更好的方法给我留言。 盛大这个抽车系统有问题，比如说有些时候在点击牌的的时候会停顿个几秒钟才会打开。我想这个系统肯定把好车给转移了。 第一 抽车的时候 要网络卡的时候抽 越卡越好 第二 抽车的时候 抽一次换一个频道再抽 第三 抽车的时候 一定要有耐心 第四 抽车的时候 每一次都抽第二张 第五 抽车的时候 不要一个人单独抽 请朋友在旁边一起抽 。 第六 抽车的时候 要感觉好的时候再抽，有钱的的人每天最好抽五次，没钱的每天抽一次，千万不要抽多。厢式车价格东风厢式车厢式车配件冷藏车价格东风冷藏车
I don't know what it is but I want it!!
1 - 6 of 6 Posts
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