Energy Trust

AAA

DEFINITION of 'Energy Trust'

A type of corporation which exists solely to hold oil and gas mineral rights. Energy trusts pay out the lion's share of the profits they collect to their investors. Energy trusts are advantageous because they are exempt from corporate taxation if they distribute more than 90% of their earnings to investors. In this way, energy trusts are similar to the better known real estate investment trusts (REITs).

INVESTOPEDIA EXPLAINS 'Energy Trust'

Energy trusts differ slightly between Canada and the United States. Canadian energy trusts are able to add new mineral properties to the trust, thus providing for an indefinite life as an actively managed mineral investment fund. U.S. energy trusts may not acquire new properties, and thus are born with a fixed quantity of reserve assets which decline gradually as the minerals are mined and sold. Eventually, U.S. energy trusts run out of mineral assets and become worthless.

RELATED TERMS
  1. Wholesale Energy

    A term referring to the purchase and sale of energy products ...
  2. Energy Sector

    A category of stocks that relate to producing or supplying energy. ...
  3. Energy ETF

    A broad class of ETFs that includes funds focused on oil and ...
  4. Oil ETF

    A category of exchange-traded funds that invest in companies ...
  5. Alternative Energy ETF

    An exchange-traded fund that invests in companies engaged in ...
  6. Peter Pan Syndrome

    A regulatory environment in which firms prefer to stay small ...
Related Articles
  1. Peak Oil: What To Do When The Wells ...
    Economics

    Peak Oil: What To Do When The Wells ...

  2. Uncovering Oil And Gas Futures
    Active Trading

    Uncovering Oil And Gas Futures

  3. A Guide To Investing In Oil Markets
    Options & Futures

    A Guide To Investing In Oil Markets

  4. Fueling Futures In The Energy Market
    Options & Futures

    Fueling Futures In The Energy Market

comments powered by Disqus
Hot Definitions
  1. Halloween Massacre

    Canada's decision to tax all income trusts domiciled in Canada. In October 2006, Canada's minister of finance, Jim Flaherty, ...
  2. Zombies

    Companies that continue to operate even though they are insolvent or near bankruptcy. Zombies often become casualties to ...
  3. Witching Hour

    The last hour of stock trading between 3pm (when the bond market closes) and 4pm EST. Witching hour is typically controlled ...
  4. October Effect

    The theory that stocks tend to decline during the month of October. The October effect is considered mainly to be a psychological ...
  5. Repurchase Agreement - Repo

    A form of short-term borrowing for dealers in government securities.
  6. Correlation

    In the world of finance, a statistical measure of how two securities move in relation to each other. Correlations are used ...
Trading Center