The British Columbia Securities Commission is warning people to do their homework when it comes to investing in income trusts.

“Income trusts have become a more common investment vehicle for Canadians,” says BCSC Executive Director Brenda Leong. “But, there are still some basic things that investors should know when they are considering investing in income trusts.”

To help investors, the BCSC has issued an investor alert pointing out some of the questions that investors should be asking before they invest.

“At the very least, people should know that income trusts are not fixed-income investments and that they should ask questions about high yields – can the trust afford to distribute the cash that they do and can they sustain that distribution?” Leong says.

The alert also cautions people to review carefully their current investment holdings to understand what exposure they may already have to income trusts. The fact is they may already have indirectly invested in income trusts though mutual funds that they own.