A Perpective on Timberland Investment
Download this as a PDFNew Forests' Managing Director David Brand contributed to the 10th anniversary jubilee publication of the Second Swedish National Pension Fund, AP2. An excerpt is provided below, or the full chapter can be downloaded, courtesy of AP2, via the link above.
Investors acquire forests to generate long-term returns from both the sale of timber as income and the capital appreciation from biological growth. Timberland has been steadily growing as an institutional asset over the past twenty-five years, and it is estimated that approximately $60 billion has now been invested by pension funds, insurance companies, foundations, endowments and wealth funds. The main characteristic of timberland that has proven attractive to investors is that the total returns tend to be low in volatility, have limited correlation with other asset classes, and have a positive correlation with inflation. Therefore it provides both portfolio diversification benefits and a hedge against inflation.