Simple introduction to "income trust"

Types of income trusts
There are three primary types of income trusts:
1.Real estate investment trusts
2.Royalty/energy trusts
3.Business trusts
The issue of economic efficiency of business trusts is controversial. On one hand, the distribution of income can force managers to exercise more discipline in investment decisions. On the other hand, the distribution can stunt the company's growth by preventing its expansion. If large numbers of growth-oriented businesses start converting to trusts purely for tax reasons, this could adversly impact the growth of the economy.

Investor risks
Income trusts are equity investments, not fixed income securities, and they share many of the risks inherent in stock ownership. Each trust has an operating risk based on its underlying business; the higher the yield, the higher the risk. They also have additional risk factors:
1.Lack of diversification
2.Potential sacrifice of growth
3.Lack of income guarantees
4.Exposure to regulatory changes
5.Exposure to interest rate risk
6.Liability
(Sources from Wikipedia)