Term of the Day
An
income trust is an
investment trust that holds
assets which are income producing. The income is passed on to the unit holders. Some of the most popular income trusts are
Real Estate Investment Trusts (REITs) and Natural Resource Trusts. The main attraction of income trusts is their ability to generate constant
cash flows for investors. They appear to favour current cash distributions over what could be the unrealized. Each income trust has an operating
risk based on its
underlying business. They are especially useful for
financial requirements of institutions such as
pension funds.