What is Timberland Investing and should institutional investors be doing it?
Timberland, or Forestry, is a classic long-term investment, relatively uncorrelated with traditional assets, and therefore providing excellent diversification potential for long-term investors whose liabilities allow them to invest in illiquid assets.
Forestry Investment remains an asset class not well understood by institutional investors, which in itself create opportunities. These three papers between them serve as an excellent introduction to the topic:
The top white papers on Timberland Investing for institutional investors
As institutional investors increasingly seek to diversify into other alternative asset classes, Timberland investment is getting more attention.
This 14 page paper from CAIA is a studied review of U.S Timberland Investing. The authors examine the historical returns from investing in Timberland. This includes analyzing the effect of maturity and inflation upon past returns, and exploring expectations for future returns.
For pension funds and other long-term investors, able to consider investment in illiquid assets, Forestry Investment has attractive diversification properties. This KPMG paper is another introduction to Timberland Investing, covering key questions such as:
- What is Timberland Investment?
- What are the types of investment available within the Timberland asset class?
- Should institutional investors consider making an allocation to Timberland?
- What impact will an investment to Timberland have upon risk and return within a diversified portfolio?
This report, published every two years by Timberland Managers, "New Forests", looks at the trends in institutional timberland landscape. The authors discuss how forest sector will merge with institutional investment trends to shape the development of the timberland asset class.
The paper covers questions of interest to institutions considering allocating to the asset class for the first time, and also for those with existing investments. Given the illiquid nature of the asset class, a five-year vision of the investment outlook is a necessity.