An income trust is a company that holds securities or assets in other businesses. It is designed to distribute income to security holders on a regular basis, usually monthly or quarterly. The main categories of income trusts are:
- Business trusts;
- Real estate investment trusts;
- Resource trusts;
- Utility trusts.
Many trusts offer investors tax benefits.
The return is in the form of income, royalties or capital gains (or losses).
Profits from the trust are distributed to the unitholders. The return depends on the operating income from the assets held by the trust as well as on royalties.
Securities are generally traded on an exchange. Those that are not traded on an exchange are much more difficult to sell.
Medium to high. The risk will depend on the type and performance of the assets held by the trust. The return of some trusts is generated by non-renewable resources. The life cycle of these resources may be difficult to estimate accurately. An investment in units of income trusts is more suitable for sophisticated investors.