Branching out: The appeal of timberland for portfolio diversification
One of the fascinating things about timberland is the resilience of its investment thesis.
Timberland has historically provided attractive risk-adjusted returns and portfolio diversification benefits, in part due to its low correlation with other asset classes, such as bonds and equities. Its relative safety and insulation from financial markets has made it a coveted staple of institutional portfolios with long investment horizons.
The fundamentals driving core investment returns remain steadfast, but the sector is now drawing in investors who are looking to deliver impact and sequester carbon, while making financial returns.
With a range of new market entrants making their first foray into forestry, what should investors expect from timberland to avoid disappointment?
Timberland benefits from a long track record. Since its emergence as an institutional- quality sector more than three decades ago, it has proven its ability to deliver stable returns amid d