Skip navigation

Mutual Fund News

New offering taps into Alberta's economic might

Fund targets energy, industry, real estate

CALGARY -- A new income trust is offering easterners the chance to taste Alberta's petro-prosperity -- without having to go through the bother of booking a moving van to Calgary.

The Alberta Focused Income & Growth Fund, which is to begin trading today on the Toronto Stock Exchange, gives investors a piece of the province's unprecedented boom, everything from the oil sands of the north to the real estate frenzy in Calgary. "It is a play on the strength of the Alberta economy," said Dean Orrico, managing director at Middlefield Group Ltd., the Toronto-based manager of the trust. Middlefield could not say where its unitholders hail from, but Mr. Orrico said there is strong interest among retail investors.

The prospectus for the fund lays out the investment case for Alberta Inc.: high energy prices, low taxes that are headed lower and a debt-free status that will allow it "considerable flexibility" to spend on capital projects and enact investment-friendly fiscal policies. On that front, Alberta has recently delivered, tabling a budget that both slashed the corporate tax rate and added billions to infrastructure spending.

One Calgary economist said it is hard to see an end to the good times. "There's not too many dark spots," said Todd Hirsch, chief economist at the Canada West Foundation.

There have been several trusts recently that have offered investors a portfolio of energy holdings, including some focused on the oil sands, but the Middlefield fund looks to capture the wider economy.

Initially, almost the entire portfolio assembled by the fund will be made up of businesses based in Alberta, with up to half of the holdings coming from oil and gas producers. Up to another 25 per cent is to be made up of the broad category of energy services firms, including trucking concerns. The remainder will be drawn from consumer-oriented companies, industrial firms -- such as Finning International Inc. and its Caterpillar business -- and the real estate sector.

Office tower rents and residential real estate prices in Alberta have been soaring along with energy prices. Last week, Calgary's average home price leapfrogged that of Toronto to claim second spot in the nation behind Vancouver, driven in part by the shortage of labour and materials in the construction sector. There is a similar story in Calgary's commercial real estate, where ambitious construction plans lag behind the accelerating demand for office space -- driving rents past those of downtown Toronto.

The Middlefield fund will have $70-million to invest, short of the $125-million ceiling in the prospectus but more than double the minimum target of $30-million.

Tomorrow, the Oil Sands and Energy Mega-Projects Trust is to begin trading. That trust, managed by Sentry Select Capital Corp., will invest chiefly in the oil sands sector, and other non-conventional sources of energy.

© 2007 The Globe and Mail. All rights reserved.

Search Fund News

Advanced Search

Only GlobeinvestorGOLD combines the strength of powerful investing tools with the insight of The Globe and Mail.

Discover a wealth of investment information and and exclusive features.

Free E-Mail Newsletters

  • Morning news headlines
  • Morning business headlines
  • Financial highlights
  • Tech alert
  • Leisure

Sign-up for our free newsletters

Back to top