WHAT WE'RE UP TO
Let's call this a “where are they now?” exercise involving the Canadian income trust fund category. Seven years ago, this category did not even exist. Then, income trusts hit the big-time and all sorts of fund companies were creating products to capitalize on the trend. Income trusts lost much of their appeal when the federal government announced they'll be subject to a new tax in 2011. However, the income trust fund category soldiers on. Let's see how it's doing these days.
TODAY'S SEARCH
We've ranked all funds in the Canadian income trust category by assets and then displayed their returns in the short and medium term.
SO WHAT DID WE TURN UP?
Modest returns that show us why no one talks much about income trust mutual funds any more. No question, the average Canadian equity fund would have done better over the past three years than the average income trust fund. But take a close look at the past year – income trust funds made 5.4 per cent on average, while Canadian equity funds averaged a loss of 0.2 per cent. This is reminiscent of the market downturn that began this decade, where trusts far outperformed the stock market.
An interesting oddity here is that the two best-performing funds over the past year have among the highest and lowest fees. Investors Income Trust Fund has the highest management expense ratio on our chart at 2.77 per cent, yet it has been a very strong performer. Top returns have also been generated by the iShares Cdn Income Trust Sector Index Fund, which has a low MER of 0.55 per cent. The iShares fund is an exchanged-traded fund, or ETF, which means it trades like a stock, and it delivers the returns of the S&P/TSX capped income trust index. The low fees of index-tracking ETFs are a definite advantage for investors seeking exposure to stocks, bonds and, yes, income trusts.
Your next step: Globefund's database has all the facts and figures on Canadian income trust funds.
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Table: View result set 
