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An income trust is an investment trust that holds assets which are income producing. The income is passed on to the unit holders. Some of the most popular income trusts are Real Estate Investment Trusts (REITs) and Natural Resource Trusts. The main attraction of income trusts is their ability to generate constant cash flows for investors. They appear to favour current cash distributions over what could be the unrealized. Each income trust has an operating risk based on its underlying business. They are especially useful for financial requirements of institutions such as pension funds.
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