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Stock Strategist

Introducing Canadian Income Trusts

Learn about the unique risks and benefits of these investments.

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International opportunities can be very enticing, but it's important to know exactly what you're getting into before you take the plunge. Morningstar is happy to announce that we are expanding our coverage of Canadian income trusts, and we wanted to help you understand this unique and increasingly popular investment vehicle. We recently initiated coverage on  Canetic Resources Trust  (CNE),  Enerplus Resources Fund  (ERF), and  Penn West Energy Trust  (PWE), and you might have heard that Canada's second-largest telecom,  Telus (TU), has also announced its intentions to convert into a trust.

What Exactly Is an Income Trust?
An income trust is a type of corporate structure used in Canada that allows companies to save on taxes by passing the tax burden to its unitholders via regular distributions. Income trusts have a wide range of names; sometimes they're called income funds, the oil and gas sector might call them royalty trusts or resources funds, and the real estate moniker is REIT (real estate investment trust).

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Kish Patel does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.