What will happen to income trusts in two years?

[dgodsell]

What will happen to income trusts in two years? How will an ETF like XTR be affected?

[pitz]

Some will convert to corporations. Some will go bankrupt. Some will be acquired by other firms.

XTR, the iShares TSX Income Trust Index ETF, will keep rebalancing itself in proportion to the index it attempts to replicate. As components leave the index, the ETF will buy shares of other trusts remaining in the index. As the last trust leaves the index, the ETF will pay, as a cash dividend, whatever cash remains as part of the fund's assets.

[dgodsell]

Thanks Pitz,

Will all those companies cease being income trusts in two years or will it stretch out longer?

What will happen to distributions and valuation for the index fund?

[pitz]

Will all those companies cease being income trusts in two years or will it stretch out longer?


They can remain income trusts, but they will then be subject to extremely punitive taxation. Converting to a corporate structure usually would provide preferential tax treatment.


What will happen to distributions and valuation for the index fund?

Valuations and distributions would be similar to that of the S&P/TSX Income Trust Index.

edit: minus any/all fund management expenses, of course.