Canadian energy trusts seem to be similar in concept to REITs (Real Estate Investment Trusts). Canadian energy trusts lease the drilling rights for various gas and oil bearing land. They in turn receive royalties for the gas or oil pumped out. Because of their special tax status, pay out a large percentage of their cash flow to shareholders (unitholders) in the form of monthly dividends (distributions).
There are also US energy trusts. But US enegery trusts have access to a very limited amount of land that can be drilled. Canadian energy trusts have access to a huge amount of untapped land.
US Investors shoudl know that the Canadian government has a 15% non-resident withholding tax on distributions to U.S. investors. But U.S. citizens can apply for a refund for at least a portion of the amount withheld.
There is also some Canadian laws that require the Canadian energy trusts to have majority Canadian ownership. So if US investors begin to own too large of a percentage of a trust, I am not sure what would happen.
I own a little bit of a couple Canadian energy trusts. The ones I own are Pengrowth Energy Trust A (PGH) and Primewest Energy (PWI). They seem to be doing well. They are really up and down a lot.
Another interesting thing about Canadian energy trusts, is that they pay dividends monthly. So your money compounds just a little quicker.