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Friday, July 29, 2011

Newest member of the Sprott Asset Management LP family: the Sprott Strategic Fixed Income Fund (SFI.UN)

Since I am pretty much fully invested, I don’t have that much money available to invest when good opportunities present by themselves or when new interesting financial product comes on the market. The Sprott Strategic Fixed Income Fund (SFI.UN) is one of those opportunities. While being in vacations, I am more or less disconnected, so I did not notice this new Sprott product until today. But SFI.UN had been launched just last week.

On July 19, Sprott Asset Management LP, who now manage 10$ billion in assets, had closed the initial public offering of Sprott Strategic Fixed Income Fund (SFI.UN). SFI.UN started its journey with 210$ million.

The Sprott Strategic Fixed Income Fund (SFI.UN) was launched at 10$ per unit. Today, despite the fact that the stock markets, US and Canadian, are both in bad shape, well, that doesn’t seem to bother the Sprott Strategic Fixed Income Fund (SFI.UN). Not at all. Currently, or should I say 20 minutes ago, SFI.UN trades at 10$ per unit. The fund is related to the fixed income, something very conservative and mostly made for seniors who don’t want to deal with too much risk under this market ultra volatility.

Myself, as part of fixed income, I own some GICs. I also own some units of the CIBC Monthly Income Fund, which is part of the fixed income family. Major part of my portfolio is invested in stocks. So adding a fixed income to my non-registered portfolio could be a good way to diversify the asset, but also, add something strong and stable in the value. Also, Sprott Strategic Fixed Income Fund (SFI.UN) units are diversified in themselves, meaning the money of the fund is diversified in different companies.

The Sprott Strategic Fixed Income Fund (SFI.UN) is actively manage, a bit like a mutual fund but in much better because SFI.UN units can be purchase just the way you purchase stocks. And from my understanding, the Sprott Strategic Fixed Income Fund (SFI.UN) will proceed with dividend distribution of 6% per year. And it’s been said: “to begin with”. Depending of the success of the fund, SFI.UN may eventually increase its dividend. But for now, a 6% yield is quite good. And on top of that, SFI.UN will proceed with monthly distribution! Isn’t that fantastic? Also, the fund dividend distribution offer a tax advantaged basis.

A 1 000$ investment in the Sprott Strategic Fixed Income Fund (SFI.UN) would provided a monthly income of... 5$. And a 2 000$... 10$. Gotha loves the stuff.

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