Topic: How To Invest

Pat: What do you think of these two trusts: Top 20 Dividend Trust and Top 20 Europe Dividend Trust? Thanks as always.

Article Excerpt

Top 20 Dividend Trust, $10.75, symbol TTY.UN on Toronto (Units outstanding: 8.0 million; Market cap: $86.0 million; www.scotiamanagedcompanies.com), invests in an equally weighted portfolio made up of the 20 highest-yielding stocks in the S&P/TSX 60 Index. The trust has an MER of 0.88% and yields 6.5%. Top 20 Dividend Trust first sold units to the public at $10 and began trading on the Toronto exchange in June 2012. Many of the top-yielding stocks in the S&P/TSX 60 Index are former oil and gas royalty trusts. Seven of the trust’s 20 holdings are oil and gas stocks, including ARC Resources, Canadian Oil Sands, Crescent Point Energy, Encana Corp., Enerplus Corp., Husky Energy and Penn West Petroleum. Together, they make up a high 35% of the trust’s portfolio. The trust’s approach has a number of negatives for investors. For example, it incurs ongoing brokerage charges as it rebalances its holdings to ensure each stock maintains an equal weighting. This approach may cause it to…

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