Roberts Nash Advisory Group

Think Big Picture...

On October 17th Anna-Marie, Jay and I were fortunate enough to see Former President Bill Clinton speak in London.  I walked into the John Labatt Centre not knowing what to expect and walked out very impressed.  Mr. Clinton talked at length about his world concerns and what he was doing about it.  He certainly expanded the term “Big Picture” for me and made my everyday concerns look somewhat trivial.  He is a tremendous humanitarian, a terrific orator and really can help some of the major education and hunger problems in the world.  I suspect he will be a great help to Hillary in her bid for the White House – and the Bush/Clinton monarchy in the US has a good chance of continuing.

When you get this, Anna-Marie and I will be in southern Portugal in a town called Alvor, in the Algarve.  We arrive back November 15th.  We have never been to Portugal but have heard many wonderful comments and look forward to doing all the touristy things and of course play a little golf.

Income Trusts are in the news all month as commentators, portfolio managers and financial advisors try to guess what the government is going to with the tax on Income Trusts.  With good reason the, the Canadian Government is afraid of income dollars not being taxed.  There is a significant amount of Income Trusts owned outside of Canada and the withholding tax is only 15%.  There is speculation that:

  • The sector could get hit with a tax anywhere from the current 0% to 20%.
  • There could be a credit for Canadian Individuals.
  • There could be a limit on the size of Income Trusts.
  • There could be a requirement not to expand beyond a specific sector.

We think the Government will do something and it looks like the high growth for Income Trusts (20%+ for 5 years) is over.  I suspect that they will still be one of the best performing Asset Classes over the next 5 years even with a tax.  Thinking “Big Picture”, where else are investors going to go with their money for a high consistent growing income?  But don’t expect 20%, think more in the 6-8% area.  Any move should help high dividend common stock in Canada – banks and utilities.  As the Baby Boomers retire there will be an increasing demand for income from their assets; therefore high quality income assets should continue to be in demand.

** I have prepared this commentary to give you my thoughts on various investment alternatives and considerations which may be relevant to your portfolio. This commentary reflects my opinions alone, and may not reflect the views of National Bank Financial Group. In expressing these opinions, I bring my best judgment and professional experience from the perspective of someone who surveys a broad range of investments. Therefore, this report should be viewed as a reflection of my informed opinions rather than analyses produced by the Research Department of National Bank Financial **