r2i forum

Friends,

I hear all the press about 10% income and capital appreciation canadian royalty trust. Any of you hold these? What is the catch?

Thank you

Cool

How about providing a link and/or describing the product? I have not heard about it, but am not too keen to Google and then comment.

There are a bunch of trusts (energy, income etc) that trade on Toronto exchange that have a high yield. Canada has announced a different taxation for them beginning 2011.

I have always been wary of stuff that trades on Toronto exchange (a lot of these trade on pink sheets in US).

Remember that you still carry the risk of these securities going down in market.

Some of these trade on US exchanges and you can look up the following.

AGUNF (yield 8% plus)
ATPWF (yield 9% plus)
PVX (yield 10% plus)
VCLDF (9% plus)

Do your own due diligence.

I do not know much about the the one you mention.

Trusts moved north due to US clamping on tax preferences these had trusts had.

Trusts are taxed differently in that they would generate form K1.

TNH is a US company that operates as a partnership that used to generate 10% plus yields just a couple of years back, but very volatile with the price of natural gas. The stock has gone from $16 to $88 in last 2 years and from 40 plus to 88 in the last couple of months or so and anything that rises like that can fall like that. Given this much rise, of course the yield has fallen. I had mentioned this a few times in the stock trading thread.

Without chasing partnerships or trusts, there are leveraged fixed income and junk bond funds and emerging market funds that yield 9% plus. HOWEVER there is no free lunch, they come with a high degree of risk and high expenses.

Personally I have a portion of my money separated from my main portfolio. This separate money of mine I use to speculate on stocks. I own TNH - it is a partnership.

At the moment I do not own any Canadian partnerships / trusts but do own some closed end bond funds which are also part of this more risky money.

My main portfolio is invested in Domestic and international indexes and in inflation indexed bonds, ginnae Mae bonds, Vanguard High yield and VMMXX at the moment due to the way the yield curve is.

Lastly, I concur with Bobus, in that if you need information, take some effort to construct your post properly with links and information, so someone can give you meaningful input or attempt to give one.

Otherwise what inclination do I really have to search and research this for you if you do not provide some more info other than a name.

Desi/Bobus

Here are some

Ticker ERF - Enerplus Resources Fund
Ticker PWI - Primewest Energy
TICKER PVX - Provident Energy

They pay more than 10% Dividend and since they are energy related, there is a chance for capital appreciation.

Any flip sides you see?

Cool

PVX is one I mentioned above in my post also.

PVX has been consistently paying dividends of about 1% a month.

As to the price fluctuation, you have the individual specific equity risk and price fluctuation will be related to energy sector prices which can be volatile and therefore investment amounts would depend on your appetitle for risk and speculation.

Note that not all of dividends from the trusts will be qualified - you will receive a form K1 advising of such at tax time. So the taxation would be a little different. Some trusts such as GLD or SLV are not entitled to preferential capital gains treatment - however for energy trusts or foreign currency trusts, I have personally not explored the cap gain issue.

Don't have any comment on upside or downside other than ones I have made in this post and earlier.