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PowerShares Financial Preferred ETF Message Board

  • ltbhdollars ltbhdollars Oct 19, 2004 7:12 PM Flag

    Canadian Diversified Income Trusts

    Canada has many diversified income trusts but most folks recognize 3 or 4 as the major players. Here is a lift from Stockhouse that gives one posters short summary with some history:

    Begin Quote

    >Are other diversifieds structured differently so that a constant distribution is maintained?

    SIN is a passive index fund, and so it follows the market (in price and distributions), I guess.

    EIT is active at the other extreme. They use margin to generate c.g. and only give out the same amount of 84 cents since the last 3 years IIRC. The interest paid on investments allows them to generate 60% ROC in the distributions. If they distributed all the accumulated unrealised c.g., this proportion would diminish. Note that EIT generated a loss in 2004Q2 (as did the others).

    EIT, CTD, SDT went through the 1998-1999 trust winter and survived, but like old folks that lived the dirty thirties that experience must have left a mark. There were days in 1998 where Enervest traded under 1000 units...

    OTOH SIN, for example, has not yet proven itself in a full interest rate cycle.

    Personnally I prefer experienced managers, not a computer program, at the head of the trusts I own. One reason is that computers do not own units, but good managers do.

    End Quote

    IMHO Enervest is head and shoulders above the others and does go up to 20% margin vs some that always have 20% cash on hand. I want them to keep monies workin at all times. Of course EIT/EVDVFs ~3% higher distribution and greater liquidity also are good points.

    But there has been a long standing unresolved debate among holders of the various diversifieds, as to which is better and why. Check them all out if you are looking to boarden your portfolio.

    Disclosure: I own EIT/EVDVF in the 4 IRAs and the taxable account I manage. Good investing and

    Luck
    LTBH

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    • NOT SURE WHAT I WANTED, SAVE AN IDEA ON WHAT this type of investment is generally yelding..........

      must express appreciation for your efforts......

      part of my problem is the situation as expressed by lith.........no uniforormity on symbols south of the border............this may also be an H20 problem....do not know....just confusing..........

      the only canadian i follow at present is UNIFORET because is primary holding of PHY....maybe,,, as is not mentioned beyond junk bonds........but know that had convertible component at time read canadian law suits involved with....but PHY does not mention such and has shown know inclination to mention or look into from calls made to company.......

      current symbol used to track UNIFORET on MSN with 15 min delay, ia CA:UNF.A............have no idea if symbol would be good elsewhere...but do NOT like this lack of uniformity shown with canadians........

      not in habit of using broker for investing.........but seems that would have to if going to do anything canadian related.......not sure am ready for at this time.........looking for simplicity in my investing life.......

      my in and out style, pretty much requires current streaming quotes............does not seem to be an option for the canadians......through current broker..........

      am likely to stick with USA by default.......or until run out of options...

      nothing negative intended to those doing the canadian.......anything that works for you is fine and i like to keep abreast of those successes.........

      just opinions.......tug

    • I am currently top-heavy in 20 individual Trusts. Somewhat diversified and most should do well as long as oil and the Canadian dollar stay up.
      But it is a lot to watch and being unable (at Schwab) to trade online is a hassle.

      I have studied Enervest and am tempted to sell all the others and put it in Enervest, and save most of the hassle and have more time away from the computer.

      Do you have any comments on that?

      • 2 Replies to vetor45
      • Vetor

        1) For diversification AND especially on the Canadian side, I chose the lower buy/sell cost of a single trust (EIT).

        2) EIT also has much better liquidity than a number of its holdings. This meant that although they are good trusts I might like to have, the low lnumber of shares traded would prevent my ownership of them as standalone units.

        3) Lastly, for me, I do not wish to own any form of partnerships but am shielded from their complications if Enervest holds them.

        4) So, for me, I buy or add to EIT unless a trust has a better yield, is not any form of partnership, and has good liquidity. If in a taxable account, then ROC could also be a factor.

        So, in summary, that is the choice I made for myself, and is certainly a valid consideration for you. A BIG consideration is also when to buy:

        A) IMHO all stocks (US and Cdn) are expensive however a swap assumes you might be swapping expensive stock A for expensive swap B, so that could be a wash

        B) At this moment the $Cdn is at .8033, a new high, so on the purchase end your US $ buys less

        C) At this moment EIT is at 7.42 vs high of 7.56 Cdn, so its is near its high

        D) Enervest usually has a rights offering (RO) in Jan-Feb time frame that in 03 knocked the price down significantly and held it down for a number of months. However the 04 offering hardly made a ding in pps and did not hold back EVDVFs upward movement.

        E) So do you wish to gamble on cheaper prices the first of the new year or buy now .... maybe a half now and half later is an approach to consider.

        With my Canadian purchases, I have found I always play the fool when waiting for cheaper shares so FOR ME have adopted a buy at least some of a new position now.

        I have held EIT in IRA/Roths for several years and, as long as your broker correctly registers your Tax Free status, there will be no Canadian Tax with held.

        I purchased Enervest this year in my taxable account (and of course 15% is with held on the gross distributions) therefore cannot report first hand on how smoothly the 1099s are handled.

        Personally, if any of your current holdings pay more and you still like em, I would continue to hold ... convert the rest when you think you will get a good price for EIT.

        Luck
        LTBH

      • I was thinking the same thing, but I couldn't get Schwab to recognize a symbol for Enervest.

 
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