Income Trusts--Understanding the Issues

Michael King

Staff Working Papers from Bank of Canada

Abstract: An income trust is an investment vehicle that distributes cash generated by a set of operating assets in a tax-efficient manner. The market capitalization of income trusts has grown rapidly over the past two years, reaching $45 billion at year-end 2002. The sharp rise of income trust valuations, the large supply of new issues, and the complexity of their legal structure have increased scrutiny of this asset class. Because retail investors are the principal owners of income trusts, the author explores whether the cash returns from income trusts are in line with the risks. The structure and valuation of a typical income trust are outlined. The benefits of income trusts and the issues related to investment are elaborated, focusing on legal and regulatory issues, corporate governance, operational issues, and market issues.

Keywords: Financial; Markets (search for similar items in EconPapers)
JEL-codes: G12 G3 (search for similar items in EconPapers)
Pages: 39 pages
Date: 2003
New Economics Papers: this item is included in nep-cfn
References: View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:bca:bocawp:03-25

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