 |
| Dow | Nasdaq | About Us | Disclaimer |  |
RSS Feed |  |
Follow us on Twitter |
|
Featured Advisors |
Saturday January 30, 2010
Blue Ribbon (BLUBF): Winner in income trusts
By Roger Conrad, editor The Canadian Edge
Many have historically relied too much on leverage and capital gains to maintain payouts; many also takeas much as 2% to 3% of assets off the top in fees each year, one exception is my latest High Yield of the Month -- Blue Ribbon Income Fund (TSX: RBN-U, OTC: BLUBF). Blue Ribbon became a member when it merged with the former Series S-1 Income Fund, a longtime member of the Portfolio, on Dec. 31, 2009. 
Under the terms of the deal, Series holders received 0.770898 units of Blue Ribbon for every Series unit they once held. This was the final step of a complex deal involving the union of eight closed-end funds run by Citadel Funds and Crown Hill Capital Corp. The deal itself was the result of a fierce battle between Citadel and Blue Ribbon Fund Management Ltd, a venture of Bloom Investment Counsel and Brompton Funds Management. Under the agreement, all of the features of the Blue Ribbon reorganization proposal were approved, including a broadened investment strategy, investment restrictions and the retention of Bloom Investment Counsel as investment manager. The greater scope of the fund will allow expenses to be spread over a larger number of units, with the result they’ll impact results less and improve liquidity of the fund units. Restrictions include a reduction on management fees to 1 percent of net asset value (NAV) and an annual redemption right for unitholders equal to 100% of NAV. The wider investment mandate now includes preferred stocks and debt instruments, a move that will increase the security of yield and should leaven out volatility over time. Blue Ribbon units have appreciated about 10% since the agreement was approved. They still trade at a discount of about 6 percent to NAV. Management has set the first monthly distribution at 5.5 cents Canadian, for a annualized yield of roughly 7%. Where that payout goes from here will depend largely on what happens to the holdings. Total returns will be heavily affected by the overall Canadian market, as they are with any fund. That’s why I generally prefer buying individual trusts and high-yielding corporations to funds. But if you’re looking for a way to own a lot of trusts at once, Blue Ribbon is about the most reliable way to do that. Buy Blue Ribbon Income Fund up to USD $9. Learn more about this financial newsletter at The Canadian Edge. |
News Flash
|
|
Since I started Canadian Edge, my general view on the plethora of closed-end funds holding trusts and high-yielding corporations has been dismal. Too often, investors get the bad and ugly as well as the good.