PORTFOLIO ROLE

Timberland investment provides stable long term returns, portfolio diversification, and inflation protection.

Private timberland is typically grouped into real asset allocations or part of a broader or private markets programme. Allocations to timberland are made to generate attractive returns from income and appreciation, provide portfolio diversification and some inflation protection.

Returns

The most widely used historic data used for private timberland is the NCREIF Timberland Index dating back to 1987. It is a property-based index reporting aggregated returns from the US. Private timberland has a relatively stable long term performance comprised of both income and capital appreciation. The income component reflects the ability to adjust harvest levels in markets where timber prices are stronger. The biological growth contributes to long term asset appreciation.

NCREIF

Diversification benefits

Biological growth, harvest flexibility and illiquidity contribute to the historically attractive risk adjusted returns generated by private timberland when compared with other asset classes.

Annual compounded return vs. annual standard deviation

Sharpe ratio for select assets

Inflation protection

Timberland has historically had a strong correlation to inflation. Land acts as a value preserver over time and real timber prices respond to economic demand and end price increases

Historic annual correlations

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