Timberland investments offers stable low-correlated returns and inflation protection over the long-term.
IWC supports investors in evaluating the role of the timberland asset class within a portfolio context. For a research note on the topic, please contact IWC.
LONG TERM OUTLOOK
Private timberland and plantation forestry investments are well positioned to benefit from the long term growth trends in global wood consumption. IWC’s experience has generated key observations central to secure good long term private investment performance.
Diversification Historic performance has reinforced the importance of multi-regional, manager, and vintage year portfolio diversification in private timberland programmes.
Performance dispersion Historic dispersion of performance across managers reinforces the need to understand clear differentiators among managers’ capabilities such as manager specific approaches to in-country presence, vertical integration, capital deployment considerations, and deal sourcing capabilities.
Developing regions Long term participation in less mature timberland investment regions has created an understanding of the merits for including developing timberland regions characterised by less competition for assets and anticipated industry development.
Complementary investments Increasing scarcity of attractively priced assets in more mature markets highlight the importance to complement primary fund commitments, with secondary investments and co-investment opportunities. These types of investments may also reduce the execution risk and enhance cost efficient capital deployment across the portfolio.
Terms and conditions Increased focus on terms and conditions to create investment opportunities with strong alignment of interest with managers. Successful negotiations can impact the economics of the investment structure meaningfully for investors.