The company recently announced it will pay a distribution of $0.04 a month. To our knowledge, it’s the only high-yield bond fund in Canada that does this.
High-yield bond funds are notoriously risky, but this one has fared very well so far. It recorded a small gain of 3.3% in 1999, its first full calendar year, and followed that with a handsome 10% profit in 2000. In the first half of this year, it gained 4.5%.
At a recent valuation of $10.55, the units were yielding 4.5% on an annualized basis, assuming no additional distributions beyond the $0.04 a month. However, the chances are that total payments will exceed that level. Last year, for example, unitholders received a total of $0.66 per unit.
From the Aug. 2001 edition of Mutual Funds Update, a monthly newsletter edited and published by Gordon Pape. For a free three-month trial subscription to the electronic edition, go to http://www.gordonpape.com/freeMFU.html/