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Fund Profile

Middlefield Canadian Income 12 May 2022


Disclosure – Non-Independent Marketing Communication

This is a non-independent marketing communication commissioned by Middlefield Canadian Income. The report has not been prepared in accordance with legal requirements designed to promote the independence of investment research and is not subject to any prohibition on the dealing ahead of the dissemination of investment research.

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Middlefield Canadian Income (MCT) offers exposure to the high dividend and growth potential in Canadian equities. Canada is a net energy exporter and its market has a high weighting to energy stocks, as well as to companies producing some key hard and soft commodities that are currently in high demand. The market is heavily weighted to financials, which benefit from a rising interest rate environment, and MCT has a structural overweight to REITs, which offer decent inflation protection. As a result, the market and MCT’s portfolio have significant value tilts which complement the growth-heavy S&P 500 while also offering economic exposure to the US through the importance of the US’s revenues for Canadian companies. MCT’s manager Dean Orrico points out that Canada also has some belated reopening beta to offer thanks to being behind the US and UK as regards its vaccination programme and lifting of restrictions, adding to the sense that Canada is in a sweet spot.

Thanks to these tailwinds, MCT has been the best-performing North American trust over the last 12 months, generating an NAV total return of 32.7% (as we discuss under Performance). MCT currently yields 3.8%, having historically yielded more than the global equity income space, with Dean and co-manager Rob Lauzon highlighting the compelling case for the future growth in underlying revenue generation and dividends (see Dividend). The managers aim to generate a high and growing dividend, and will often use a falling yield as a valuation signal.

Despite this strong performance and the portfolio’s positive exposure to an inflationary environment, MCT trades on a wide Discount compared to its peers, which is currently 11.4%.

Analyst's View

Canada offers compelling advantages in the current inflationary environment, and MCT’s income strategy and key sectoral biases mean it is well positioned for this. The portfolio has a strong value and cyclical bias, and its positioning in financials and energy in particular makes it well positioned to capitalise on both inflation and rising interest rates. In this regard Canada has a lot in common with the Latin American region, through offering greater political stability, better corporate governance and a more mature set of companies and sectors. We therefore think it could be the safer bet for investors who believe that the current inflationary environment is more than a short-term blip, and that it offers an intriguing way to keep exposure to North America while moderating the significant growth bias in the S&P 500. We think that MCT’s double-digit discount reflects the fact that investors have not caught on to this yet, and that it may offer an attractive long-term entry point as well as allowing investors to ‘lock in’ a higher share price yield.

For income investors Canada is unlikely to be a major exposure, meaning MCT offers geographical diversification. The high exposure to REITs and the strength of the Canadian real estate market are other differentiating factors, while the depth of opportunities across energy producers and midstream pipelines is hard to find elsewhere.


  • High dividend profile with strong underlying revenue generation
  • Discount offers attractive entry point
  • Canadian market is well suited to the current macro environment


  • Gearing can enhance losses on the downside
  • High OCF compared to that of peers
  • May underperform global markets during strong growth-stock rallies
Continue to Portfolio

Fund History

19 Apr 2024 Canadian dispersion
A normalisation of returns across North American equities may prove supportive of MCT…
03 Apr 2024 Fund Analysis
MCT: stable income from an overlooked equity market…
23 Jan 2024 Canada’s time to shine
MCT’s strong dividend growth and prospective rate cuts may result in the trust’s discount tightening in the year ahead…
13 Dec 2023 On a roll
Higher energy prices, strong balance sheets, and peak rates all look supportive of MCT’s energy holdings…
20 Sep 2023 Results analysis: Middlefield Canadian Income
MCT could benefit from an end to the rate hiking cycle…
06 Sep 2023 You should be dancing…
North America should be a core part of any portfolio…
22 Aug 2023 Fund Analysis
MCT: stable income from an overlooked equity market…
17 Aug 2023 Canada: lower valuations and attractive growth - Podcast: Trust Issues #21
We speak to MCT Manager Dean Orrico about the prospects for the equity income trust...
24 May 2023 Five alternatives for income investors
Watch the presentations from our event focused on trusts delivering income via a diverse range of strategies…
18 May 2023 Middlefield Canadian Income
Dean Orrico
Rewatch this webinar from our online series in May 'Alternatives for income investors' hosted by the team at Kepler Trust Intelligence 15-19 May…
Watch Recording
17 Apr 2023 Results analysis: Middlefield Canadian Income
MCT saw positive share price returns in 2022 despite a tough macro environment…
30 Mar 2023 A new frontier for income investors
The managers of Middlefield Canadian Income think valuations and a new immigration policy put this little known destination for UK investors in an attractive position…
16 Mar 2023 Diversity matters
We examine the effect of blending multiple funds within your regional allocation and find that – while the culture wars may rumble on elsewhere – the benefits of diversity for investors are unarguable…
30 Dec 2022 They’re coming to…Canada?
Large numbers of immigrants may continue to make Canadian real estate an attractive investment…
23 Dec 2022 Catch-22
The housing market is in a strange position as we head into the new year…
30 Nov 2022 Cry havoc!
Lessons from a year in which an already troubled world was savaged by the dogs of war...
10 Nov 2022 Fund Analysis
A long track record of steady dividends and unique exposure to Canadian equity income stocks makes MCT an ideal income portfolio diversifier...
10 Nov 2022 Light at the end of the tunnel
Our speakers struck an optimistic note this week as we considered the prospects for investors at the end of a difficult year…
10 Nov 2022 Slides and Audio: Middlefield Canadian Income
Download the presentation and listen to the audio from our webinar from 9 November...
12 Oct 2022 A bright spot in North America
Canada’s economy is shielded against many of the problems the world is facing today…
21 Sep 2022 Results analysis: Middlefield Canadian Income
MCT's wide discount may prove attractive to investors...
07 Sep 2022 American muscle
Beating US indices is a monumental task. We examine the closed- and open-ended North American sectors to see how they have fared…
27 Jul 2022 Has the comeback begun?
Our analysts debate whether the market has fully priced in the current inflation and looming recession…
20 Jul 2022 Ingredients for success
We identify several less conventional trusts that offer strong sources of diversification to major indices…
24 Jun 2022 Delivering returns in a financial storm
We look at three trusts that have managed to deliver returns for shareholders so far in 2022…
27 May 2022 Canadian stocks have a lot of tailwinds in their favour
Trusts like MCT may benefit from rising prices and an economic bounce back…
12 May 2022 Fund Analysis
MCT allows investors to access a high-yielding market prospering from high commodity prices at an attractive discount…
29 Apr 2022 O Canada
The North American market may act as a safe haven for investors in the near future…
27 Apr 2022 Finding value in a haystack
Non-income value strategies are becoming increasingly scarce, but the holdouts represent attractive near-term opportunities…
View all

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