Forest Investment Associates is pleased to share our latest article, “Timberland — Resilience, opportunity amid economic uncertainty,” published in the latest Investments & Pensions Europe magazine. The article delves into the advantages of incorporating timberland into investment portfolios. In this piece, we analyze how timberland offers low volatility, resilience, and value preservation, along with the optionality provided by natural capital.
Key Highlights
- Low Volatility and Stable Returns – Timberland investments have historically demonstrated low volatility and stable returns, serving as a hedge against market fluctuations. Over the past decade, U.S. timberland, as represented by the NCREIF-Total Timberland Property-Level Index, has achieved a Sharpe ratio of 1.43, nearly double that of the S&P 500.
- Resilience During Economic Downturns – Our analysis indicates that timberland’s performance remained stable during significant market disruptions, such as the Dot Com Bubble, the Global Financial Crisis, the European Sovereign Debt Crisis, and the COVID-19 Pandemic, preserving value with non-negative returns during these periods of economic stress.
- Value Preservation and Natural Capital Optionality – Timberland investments benefit from biological growth and the flexibility to adjust harvest timing in response to market conditions, allowing for value preservation. Additionally, timberland offers opportunities related to natural capital, such as carbon sequestration and biodiversity conservation, which can enhance long-term investment value.
We believe that timberland’s unique characteristics make it a compelling addition to diversified investment portfolios, particularly in today’s uncertain economic environment.
To read the full article, click here or visit: Investments & Pensions Europe magazine.
