investment trusts
GUARDIAN MONTHLY HIGH INCOME II FUND $8.21 (CWA Rating: Income) (GGOF Guardian Group of Funds, Commerce Court West, Suite 4100, P.O. Box 201, Toronto, Ontario M5L 1E8. 1-800-668-5613; Web site: www.ggof.com. Available from brokers) continues to emphasize more stable real estate investment trusts (REITs), and high-quality, long-lived resource trusts. We like the fact that this fund emphasizes trusts with stable cash flows, low capital expenditures and mature businesses. The $478.4-million fund’s top holdings are: Crescent Point Energy Trust, Canadian Oil Sands, RioCan REIT, ARC Energy, Boardwalk REIT, Keyera Facilities Income Fund, BFI Canada, Vermilion Energy Trust, CML Healthcare Income and Enerplus Resources Fund....
Brookfield Properties Corp., $7.14, symbol BPO on Toronto (Shares outstanding: 391.1 million; Market cap: $2.8 billion), owns, develops and manages office buildings in some of North America’s largest cities. Brookfield’s commercial portfolio consists of interests in 108 properties totalling 74 million square feet in the downtown cores of New York, Boston, Washington, D.C., Los Angeles, Houston, Toronto, Calgary and Ottawa. Brookfield Asset Management (symbol BAM.A on Toronto), holds a 50% interest in Brookfield Properties. The other 50% trades on the Toronto exchange. Office buildings account for about 78% of Brookfield’s revenue, and residential housing accounts for about 22%. Brookfield’s residential land-development and homebuilding operations are mainly based in Alberta (42% of total acres), Texas (26%), Colorado (18%), Ontario (13%) and Missouri (1%)....
Brompton VIP Income Fund, $6.28, symbol VIP.UN on Toronto (Units outstanding: 47.2 million; Market cap: $296.4 million), holds a portfolio of mostly income trusts, along with some common stocks and bonds. The fund focuses on business trusts, with smaller weightings in real estate investment trusts (REITs), oil and gas trusts, power and pipeline trusts. The fund may also invest a portion (less than 10% of its value) in common shares. The Brompton VIP Fund first sold units to the public at $10, and began trading on Toronto in February 2002....
Sentry Select Diversified Income Fund, $2.17, symbol SDT.UN on Toronto (Shares outstanding: 219.7 million; Market cap: $476.8 million), is a closed-end mutual fund that mainly invests in royalty trusts, income trusts and real estate investment trusts (REITs). The fund also invests in high-yielding common shares. Earlier this year, the fund changed its name to Sentry Select Diversified Income Fund. (It was formerly Sentry Select Diversified Income Trust.) The change is meant to reflect management’s intention to keep buying dividend-paying common stocks, while cutting the fund’s income trust holdings. About 19% of the roughly 90 investments Sentry holds are common stocks, and the rest are mostly trusts. Sentry is doing this in response to Ottawa’s plan to start taxing trust distributions in 2011. In many circumstances, the new tax will eliminate the tax advantage income trust distributions hold over dividends....
ISHARES CDN REIT SECTOR INDEX FUND $7.22 (Toronto symbol XRE; buy or sell through a broker) holds the 11 Canadian real estate investment trusts (REITs) in the S&P/TSX Capped REIT Index. The weight of any one REIT is limited to 25% of this index’s value. RioCan REIT makes up 23.3% of the index’s total value; Canadian REIT, 14.1%; Boardwalk REIT, 11.3%; H&R REIT, 10.9%; Canadian Apartment Properties REIT, 9.6%; Calloway REIT, 7.2%; Primaris Retail REIT, 6.1%; Cominar REIT, 5.2%; Chartwell Seniors Housing REIT, 4.9%; Extendicare REIT, 3.2%; and InnVest REIT, 2.2%. We’re glad to see that the top holding is RioCan, one of our favourite REITs. In fact, the top three holdings are among our recommendations. Note that iShares CDN REIT holds a couple of REITs we don’t recommend....
These are difficult times for income-seeking investors. Bonds yield around half of what they did 10 years ago. Yet more and more investors have reached an age when they pay close attention to investment income, to pay for retirement or because they see income as a sign of investment quality. This has renewed investor interest in income trusts. Despite Ottawa’s plans to start taxing trust distributions in 2011, they should continue to pay above-average yields for years to come. Unfortunately, however, high current yields on the majority of trusts obscure their drawbacks. Income seekers may assume that yearly distributions on income trusts are likely to hold steady like interest on a bond, or rise like dividends on a stock. But in the long term, all too many trust distributions are more apt to dwindle or halt abruptly. That’s because many trusts own so-called ‘cash cow’ businesses. These are businesses that can be milked for their cash flow for years to come, but that are likely to stagnate or stumble as the economy changes and competition grows....
SINGAPORE FUND $8.19 (New York symbol SGF; Shares outstanding: 9.4 million; Market cap: $76.7 million; CWA Rating: Aggressive) is fully invested in Singapore stocks. The manager is the Development Bank of Singapore. Singapore’s economy is dependent on exports to major markets such as the U.S., China and Japan. It should prosper anew when these market recover. The Singapore Fund’s top holdings are: United Overseas Bank, 11.8%; Overseas-Chinese Banking 9.6%; Singapore Telecom, 9.3%; Keppel Corp. (varied industries), 5.4%; Capitaland (property), 4.4%; Hongkong Land Holdings, 4.1%; SMRT Corp. (Singapore public transit), 3.8%; Sembcorp Marine (shipbuilding), 3.8%: Singapore Petroleum, 3.0%; and Ascendas REIT (commercial real estate), 3.0%....
Turmoil in financial markets and slowing economies have hurt stock markets worldwide. But when government measures to counter the credit crisis begin to take effect, and when economic growth resumes, top-quality foreign stocks should rebound. Here are four closed-end funds trading on the New York Exchange at discounts to their net asset value. Three are buys, and one is a hold. SWISS HELVETIA FUND $11.39 (New York symbol SWZ; Shares outstanding: 33.2 million; Market cap: $378.6 million; CWA Rating: Conservative) invests mainly in large-capitalization Swiss stocks. The fund’s manager is Hottinger Group, which, as Banque Hottinger, dates back to 1786....
GUARDIAN MONTHLY HIGH INCOME II FUND $12.83 (CWA Rating: Income) (GGOF Guardian Group of Funds, Commerce Court West, Suite 4100, P.O. Box 201, Toronto, Ontario M5L 1E8. 1-800-668-5613; Web site: www.ggof.com. Available from brokers) continues to emphasize more stable real estate investment trusts (REITs), and high-quality, long-lived resource trusts. We still think you should diversify carefully with trusts. Emphasize those with stable cash flows, a low need for capital expenditures and mature business operations. The $884.8 million fund’s top holdings are: Crescent Point Energy Trust, Canadian Oil Sands Trust, RioCan REIT, ARC Energy, Cominar REIT, Yellow Pages Income Fund, BFI Canada Income Fund, Vermilion Energy Trust, Bonavista Energy Trust and Enerplus Resources Fund....
ISHARES CDN REIT SECTOR INDEX FUND $13.36 (Toronto symbol XRE; buy or sell through a broker) holds the 12 Canadian real estate investment trusts (REITs) in the S&P/TSX Capped REIT Index. The weight of any one REIT in the value of the S&P/TSX Capped REIT Index is limited to 25%. RioCan REIT makes up 25% of the index’s value; H&R REIT, 14.9%; Canadian REIT, 10.1%; Boardwalk REIT, 9.0%; Calloway REIT, 8.1%; Canadian Apartment Properties REIT, 6.3%; Primaris Retail REIT, 5.9%; Cominar REIT, 4.6%; Chartwell Seniors Housing REIT, 4.2%; Innvest REIT, 4.0%; Extendicare REIT, 2.7%; and Dundee REIT, 2.6%. We’re glad to see that the top holding is RioCan, one of our favorite REITs. In fact, the top three holdings are among our recommendations. Note that iShares CDN REIT holds a couple of REITs we don’t recommend....