Canadian royalty trusts have gathered interest from investors over the past year as their yields, or returns, average well in excess of ten percent.

Income funds or royalty trusts are traditionally defined as mutual funds that generate income by investing in "income-producing" (positive cash flow) securities, including both stocks and bonds.

Successful Canadian royalty trusts tend to be oil and gas companies which, due to special tax status, pay out a larger percentage of their cash flow to share or unit holders in the form of cash distributions.

Enerplus Resources Fund is North America's largest oil and natural gas income fund.

The fund invests in mature crude oil and natural gas producing properties located primarily in Western Canada.

One of the attractive features of investing in such an income trust (fund) is that one benefits from owning a large and well-diversified portfolio of income producing crude oil and gas properties without exposure to exploration risks usually associated with such properties (companies).

The cash flow from the properties is subsequently distributed to the unit-holders on a monthly basis.

Higher oil and natural gas prices have inflated the value of the Canadian energy company's asset's and earnings. Also a yield of 12 percent is attracting international interest,

as well a recently noted pact to buy Chevron Texaco assets which should further booster the attractiveness of this fund.

If your portfolio requires a definitive income-producing asset, this fund may be an attractive alternative to lesser performing stocks and or bonds.

Paul M. Jenkins is a financial advisor with LOM Securities (Bermuda) Ltd. Before one makes any alterations in his or her portfolio he or she should consider the consultation of an investment professional.