Income fund for 72-year-old
Q – My 72-year-old father is looking for a reliable balanced Canadian income fund to draw a stream of dividend income. What do you think of CIBC Monthly Income Fund (managed by Stephen Gerring) as a low-risk, one-stop fund? Would its diversification alone be sufficient, or would other funds be needed in the mix for adequate diversification? My dad is risk-adverse and wants to hear of any simple one-stop solutions you might otherwise suggest. – S.D.
Gordon Pape answers: This is a very good fund and it offers excellent cash flow with distributions of 6c per unit monthly. Of course, that payment is not guaranteed but I have spoken to CIBC about this and they have advised me that they are confident that the current distribution level can be maintained through 2004, barring some totally unexpected development.
The portfolio is well diversified, with only 11 per cent of the assets in income trusts, which have been experiencing a rough ride recently. The one-year return of 13.1 per cent to April 30 is slightly below average for the Canadian Balanced category, but so is the risk level of the fund.