What are trust units?

Trust units offer a much higher return than traditional investment vehicles such as bonds and term deposit certificates. But before choosing them, you should be aware of their characteristics.

Trust units fall into three categories:

Real estate trusts are the safest. Of the three different types, they offer the most stable returns. Their revenues come from rental companies, i.e. office buildings, shopping centres, and residences for the elderly or long-term care facilities.

Royalty trusts encompass the natural resources sector, including natural gas, oil, coal, lumber, etc. Their revenues are generated by the sale of resources by operating companies.

Income trusts are an amalgamation of trust units, such as those for hydroelectric plants, and natural gas transportation and coal exporting companies. They also include specialized funds such as First Premium and American Income, which were launched to take advantage of fluctuations in the stock market.

While they all offer significant tax benefits, they also have specific risks that you must also consider.