Good to know

Institutional investors in North America first discovered forest as an investment in the 80s of and it has proven successful every since. In the last 25 years, substantial returns have been achieved in the USA at a comparatively low risk. The asset class forest is characterized in particular by its degree of independence compared to other financial market activities. The main reason for this positive feature is, amongst others, the flexibility concerning the felling in times of weak wood markets.

If the prices of wood decrease, the use of wood can be interrupted for some time, the wood will continue to grow without further assistance – a kind of “biological interest rate effect”. “Timberland” is therefore in the situation of being able to stabilize overall portfolios, especially in times of turbulent financial markets.

Wood is still an essential commodity in our modern technological world. Especially against the background of the growth forecasts for the world population, a rising demand for wood can be predicted for the future. In particular, the strong growth in emerging markets, a rapid demand for pulpwood and lumber can be expected. In addition, the use of wood for energy production will become more important worldwide.

The finite nature of fossil fuels and the drastically rising price of crude oil show the significance of renewable forms of energy.
Through the much-discussed climate change and the resulting demands of the United Nations to reduce CO2 emissions, the raw material wood is of particular importance. Due to the emerging trends can be expected that the price of wood as well as the value of forest land will continuously rise in the future.

In addition, forest is not subject to abrasion. Consequently, the lifetime of a sustainably managed forest is infinite and the value increases from year to year.

Forestry investments boast very good risk-return ratios. The inclusion of Timberland in an overall portfolio can yield high returns whilst mitigating risk.