Why invest in Forestry?
- Tangible asset
- Sustainable and green
- Hedge against inflation
During the economic crisis of the last few years, interest in forestry investments has increased considerably. An investment in forestry is one where tangible assets are purchased for a longer term, thus decreasing risk and stabilising one’s portfolio. The green aspect of forestry is also worth consideration, as timberland is by nature sustainable.
Key investment attractions
When you are thinking of investing in forestry, it is important to know what our investments can offer you. Investing in forestry (the asset class timber) offers a number of benefits to your portfolio.
- Timber correlates highly with inflation and is therefore an effective investment for preserving capital. It has outperformed other commodities in both high and low inflationary environments.
- Timber has a low to negative correlation with other asset classes.
- Diversification: An investment in forestry helps in creating a more efficient portfolio while providing a better match for long-term pension liabilities or the long-term horizon of endowments and foundations.
- Forestry investments fall within the alternative asset class and, like private equity and real estate, provides an excellent complement to the traditional asset classes of equity and fixed income.
- Reduced volatility: In relation to forestry’s rate of return, the volatility is low. This is due to the biological growth of the trees. The trees will grow independent of what happens on the financial markets.
- When an investment in forestry is combined into a diversified portfolio, returns tend to smooth over time, thereby reducing the overall portfolio’s risk level.
Plantation forestry (in Germany):
- Besides the benefits of forestry (in general) listed above, plantation forestry has a couple of unique characteristics that makes it a very attractive option for investors:
- Plantation forestry is sustainable, as Acacia trees will regrow from stump after being harvested.
- Germany offers our clients a stable economic and political location for their investments.
- Our clients can purchase the freehold title to the land, increasing their security and the opportunity to benefit from ever increasing farmland prices.
- Over the last 10 years, farmland prices in our plantation areas have increased with 300%.