Timber ETFs


Timber ETFs make good sense now as a reader pointed out when he wrote:

“Barclay’s Bank in London just launched a timber ETF at a time when lumber prices are at a low. We may have a building bust here, but the rest of the world is using timber. Just this summer, we had to get some tmber fencing done and there was an 8 week waiting period to obtain panels. I don’t know if this is due to the Chinese using timber panels as a quick and easy way to hide stuff they don’t want Olympic tourists to see or whether its part of a bigger demand. Investigations have shown timber investment to be among the most profitable and stable investments available. World agricultural prices are rising which puts extra demand on land prices. Brazil might be fellling more forests for ethanol as well.”

I agree and have written about investing in timber for many years.

The great news about timber is that it is the only commodity that has had a steadily rising price over 200 years, 100 years, 50 years, 10 years. And a unit of wood, just the price of a piece of wood — in real terms — beat the S&P over most of the 20th Century, from 1910 to 2000. The price of a piece of wood actually outgrew the price of a share of the S&P. The yield from timber averaged about 6.5%. The yield from the S&P averaged 4.5%. In each of the three great past bear markets the price of timber rose. Timber is the only reliable negatively correlated asset class when it really needs sit to be. This is because timber owners can withhold the forest. If they find the price of lumber low, they just don’t cut. There is no cost of storage and the tree continues to grow and increase in value.

See more about this at http://www.garyascott.com/inspired/223/index.html

http://www.garyascott.com/inspired/223/index.html

See http://www.garyascott.com/2005/01/01/1334.html

Nothing has changed in my thinking on this since I wrote the messages above and the Barclay’s Timber ETF could be a good way to get out of the US dollar, into this valuable commodity.

Barclays Global Investors just launched this ETF under the name “iShares Global Timber and Forestry exchange traded fund”. This fund is listed on the London Stock Exchange and is the first timber sector ETF ever listed there

The fund will invest in twenty five 25 companies around the globe. The companies within the fund include forest products companies, timber REITs, paper products companies, paper packaging companies or agricultural companies engaged in the ownership and management of woodland. The goal of the fund is to peg growth to the Standard & Poor’s Timber and Forestry index.

Timber investments outperformed equities, bonds and commercial property in 2006, with a 20% rise for the year compared to a 16.8% overall growth of equities.

As an exchange traded fund (ETF) listed on the London Stock Exchange you can buy these ETF shares through any broker or investment bank (such as Jyske bank) just as you would buy any ordinary share.

The fund started October 15, 2007 and its base currency is the EURO though it trades on the London Stock Exchange (the code there is WOOD) in pounds.

The original geographic spread of investments is:

USA 40.00%

Canada 19.50%

Brazil 8.90%

Finland 7.10%

Sweden 6.60%

Australia 5.00%

Spain 3.60%

Hong Kong 3.30%

South Africa 3.10%

Japan 2.90%

The sector breakdown is:

Paper packaging 43.10%

Forest products 36.90%

Specialised REITS 20.10%

The ten largest initial investments are:

Plum Creek Timber Co. 8.10%

Sino-Forest Corporation 7.50%

Rayonier Inc. 7.50%

Weyerhaeuser Corp. 7.20%

Votorantim Cellulose e Papel 4.90%

Canfor Corporation 4.90%

Potlatch Corp. 4.50%

Stora Enso Oyj – R Shares 4.10%

West Fraser Timber 4.00%

Packaging Corp. of America 4.00%

I believe in timber investments in all seasons as you can see in the pictures below.

Summer, Autumn and Winter, timber here just keeps growing…in size and value.

Until next message may your investments grow in size and value as well.

Gary

We hope you will join us in Ecuador as we look at Timber, Green and Green Timber portfolios in our upcoming International Business and Investing courses in Ecuador including the house and condo that are for sale and can be seen at http://www.garyascott.com/2007/10/29/1855.html

Space is always limited. We can have a maximum of 50 at this courses and currently 47 have reserved and paid. Many more have enquired.

Sign up as soon as possible and share the satisfying, profitable and exciting lifestyle that being international brings with Merri and me. To enroll please go to: http://www.garyascott.com/gr1018.html

Stay on and enjoy a two day real estate tour. Details are at http://www.garyascott.com/catalog/ecuador-tours-november-2007

Stay on and enjoy our Shamanic Tour! Don’t miss this tour as it will be the last for at least a year. We have had over 4,500 enquiries about Ecuador in the past five months. 90% of them have been about Ecuador real estate so in 2008 we’ll be expanding our real estate tours instead of the shamanic tours.

http://www.garyascott.com/catalog/ecuador-shaman-mingo-tour


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