TFSA Investors: 1 Closed-End Fund That Could Deliver Superior Returns

Enervest Diversified Income Trust (TSX:EIT.UN) is managed in accordance with the investment strategy and could turn out to be a very good investment over the long term.

| More on:
edit Woman calculating figures next to a laptop

Image source: Getty Images.

The investment objectives of Enervest Diversified Income Trust (TSX:EIT.UN) are to maximize monthly distributions relative to risk and maximize net asset value, while maintaining and expanding a diversified investment portfolio. The company accomplishes this primarily through acquiring, investing, holding, transferring, disposing of, or otherwise dealing with or in equity and debt securities of corporations, partnerships, or other issuers and such other investments.

Rational investment objectives

Further, Enervest’s investment objectives are achieved through direct acquisitions, investments, or through exchange offers completed by Enervest from time to time. The assets of Enervest are invested in equity or debt securities, which include energy-related corporations and partnerships. These typically include investments in oil and gas, oil and gas services, industrial, propane, natural gas liquids, pipeline, production and handling facilities, and coal corporations.

Diverse investments

The company also invests in resource-oriented corporations, real estate investment trusts (REIT’s), and any other corporation, partnership, or other issuers operating in an industry, as the manager may determine meets Enervest’s investment objectives. The fund also invests in a broad range of income-producing investments, including the securities of publicly traded REITs, and preferred shares of issuers engaged in businesses in various industries and geographic regions.

Income from these investments, including capital gains arising from capital appreciation, is used to support regular monthly distributions to unitholders and quarterly distributions to Series 1 preferred unitholders and Series 2 preferred unitholders. The fund’s portfolio manager is responsible for selecting members of securities exchanges, brokers and investment dealers for the execution of transactions in respect of Enervest’s investments and the negotiation of commissions in connection with the fund’s trades since Enervest is responsible to pay those commissions.

Third-party research

From time to time, the portfolio manager direct brokerage transactions involving Enervest’s brokerage commissions to a dealer in return for the provision of goods and services other than order execution. Brokerage business is allocated to dealers and brokers based on quality of service and the terms offered for specific transactions including price, volume, speed and certainty of execution, the competitiveness of commission terms and prices, the range of services, and the quality of research provided and total transaction cost.

In addition to order execution goods and services, dealers or third parties often provide research goods and services, which include advice as to the value of securities and the advisability of effecting transactions in securities, analyses and reports concerning securities, issuers, industries, portfolio strategy, or economic or political factors and trends. Such research goods and services are provided by the executing dealer directly or by a party other than the executing dealer, and include specific company and industry research reports — publications marketed to a narrow audience.

Investment strategy adherence

Principals of Enervest meet regularly to review the investment policies of the fund with respect to regulatory issues, sales practices, internal conflicts of interest and general business practices relating to the operations of the fund. There are no formal risk-management policies, practices, or guidelines; however, the fund is managed in accordance with the investment strategy and could turn out to be a very good investment over the long term.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Nikhil Kumar has no position in any of the stocks mentioned.

More on Investing

grow dividends

Don’t Look Now, But These 3 TSX Stocks Look Poised for a Nice Rally

Three TSX stocks are rising amid the elevated market volatility due to rate-cut uncertainties and geopolitical risks.

Read more »

Close up shot of senior couple holding hand. Loving couple sitting together and holding hands. Focus on hands.
Dividend Stocks

Here’s the Average CPP Benefit at Age 70 in 2024

Canadian retirees can supplement their CPP payout by investing in blue-chip dividend stocks such as Enbridge.

Read more »

woman data analyze
Tech Stocks

1 Stock I’d Drop From the “Magnificent 7” and 1 I’d Add

Tesla (NASDAQ:TSLA) stock is part of the Magnificent Seven, but Shopify (TSX:SHOP) is growing faster.

Read more »

Gas pipelines
Dividend Stocks

Is Enbridge the Best Dividend Stock for You?

Enbridge now offer a dividend yield of 8%.

Read more »

tsx today
Stock Market

TSX Today: What to Watch for in Stocks on Thursday, April 18

Rising metal prices could lift the main TSX index at the open today as focus remains on the ongoing geopolitical…

Read more »

Hand arranging wood block stacking as step stair with arrow up.

2 Pandemic Stocks That Are Still Rising, and 1 Offering a Major Deal

There are some pandemic stocks that crashed and burned, while others have made a massive comeback. And this one stock…

Read more »

Supermarket aisle with empty green shopping cart

CRA: Will You Receive a Grocery Rebate in 2024?

The grocery rebate was introduced as a one-time tax credit for low-income Canadian households to offset higher prices.

Read more »

question marks written reminders tickets

BCE Stock’s Dividend Yield Hits 9%—Is it Finally Time to Buy?

BCE (TSX:BCE) stock has a super-swollen dividend yield right now as it passes 9%.

Read more »