Q: Have held this for a long time in a cash account, and been reasonably happy with it. Certainly the monthly distribution has been consistent through all ups and downs (although I don't think it has ever been increased). Early in the pandemic I added it to my RSP, so have nice capital gains on top of the distribution. However, the last couple years EIT has made some type of year-end capital gains distribution for tax purposes that increases the ACB, but does not actually put money in your pocket. This is fine for the cash account, but useless in the RSP. Could you comment on the process they are using and why, and am I correct that this is not beneficial to an RSP holding. I realize that I am still getting the regular monthly distribution, but question continuing to hold this in my RSP when there are several relatively new ETFs that pay a higher distribution without this complication. Should I continue to hold EIT in my RSP?
Thank-you
Thank-you
5i Research Answer:
This is a 'phantom' distribution. It is correct that in a registered account adjusting the ACB for these does not benefit the investor in any way. But we would still focus on net performance rather than tax difficulty. The fund has a five-year annual compounded net performance of 17.35% and has held up quite well in market downturns. We think this offsets and tax annoyance.