Russell Investments Canada Ltd. announced on Tuesday that it has added new distribution options to the Russell Managed Yield Class, in an effort to increase income, but not taxes.

Investors will now have annual distribution options of 3% or 5% that are paid monthly. The distributions are made up of return of capital, rather than interest income, which can lead to tax savings for investors.

“Fixed income investments provide interest income that is taxed at nearly twice the rate of capital gains,” said Keith Pangretitsch, director of national sales at Russell Investments Canada Ltd.

“Russell Managed Yield Class solves this problem by distributing tax efficient income. As a result, you can increase your cash-flow with these new distribution options, not your tax bill.”

According to research conducted by Russell, investors can keep up to 87% more of their return on an after-tax basis by using the Russell Managed Yield Class, compared to the same fixed income portfolio in a traditional mutual fund trust structure.

Pangretitsch urges advisors to help investors incorporate this type of product into a long-term tax-efficient investment strategy.

The Russell Managed Yield Class is distinct from most corporate class structures in that its assets are sub-advised by third-party fixed income managers through its reference fund, the Russell Canadian Fixed Income Fund, and offers a multi-manager approach.

IE