A two part mini-series on Timber Investing.
Timber Agg 1: Introduction to Timber Investing
Here we at Investment Moats, we hope to to discover good asset classes or instruments that are obscure to most investors, especially Singaporean Investors.I first heard about timber sometime back but didn’t really follow up on this since I thought this is just another agriculture. Little did i know it is very wrong. In this first article by Index Universe, the author outline the historical returns of timber as an asset class that by itself, have a lower volatility, higher measurable long term returns then equities.
Most of all in potentially higher inflation times like this, timber does have a higher correlation to it then other asset classes.
Why the focus now? I think as Singaporean investors, we can expose to this asset class through ETFs. iShares S&P Global Timber & Forestry Index Fund ETF was recently listed and together with Claymore/Clear Global Timber Index ETF, they present viable option.
The question we ask ourself is whether it makes sense to invest in timber ETFs as a long term allocation in your portfolio. Read more…
Timber Agg 2:How to invest in timber
The best way to describe my feeling after reading this second article is like buying that candy and realise it didn’t taste that well to awful.Here George Nichols outline that in truth, timber investing is but a myth for the average investors. The ETFs and the REITs out there are not pure play in these sector and thus, will not take advantage off the benefits that we have stated in the previous article.
This is comparable to investing in a energy fund and realise that hey, its got a sort of problem that the underlying oil does not have! We been here a few times wih Gold and Oil at record prices yet the funds don’t perform up to expectation and this seem to be an excellent primer from us investing in another one of those situation. Read more…