Timber investors are barking up the right tree
Although once considered an exotic investment, the forestry sector is winning fresh converts. So what is so attractive about investing in timber?
Timber has a low correlation with other asset classes and hasn't been affected by the stockmarket downturn, says David Budworth in The Sunday Times. "The trees have never heard of the Nasdaq bubble and they don't know what a War on Terror is," says Steve Sjuggerud on Dailywealth.com. Rising demand should be underpinned by China's booming economy, keeping prices robust. The UN Food and Agriculture Organisation predicts world consumption of industrial roundwood will rise 60% over the next 25 years.
The newcomers join longstanding fan Jeremy Grantham, chairman of investment firm GMO. A persistent "stockmarket Cassandra", he recently said that timber remains his favourite asset class and he forecasts it will be top performer over the next seven years. According to Grantham, over the past century the price of wood has averaged an annual increase of 6%. Stumpage prices the value of all wood on the stump has outpaced inflation by 3% a year.
British investors may regard forestry as an exotic investment, but it is fast becoming mainstream in the US, says Budworth. For example, Harvard University plans to earmark 10% of its $26bn investment fund to timber. The two biggest US timber producers, Rayonier (RYN) and Plum Creek Timber (PCL), have proved very popular with investors in recent years, managing double and triple-digit stock-price gains in the post-dotcom boom era, against a decline for the S&P 500.
MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Get the latest financial news, insights and expert analysis from our award-winning MoneyWeek team, to help you understand what really matters when it comes to your finances.
MoneyWeek is written by a team of experienced and award-winning journalists, plus expert columnists. As well as daily digital news and features, MoneyWeek also publishes a weekly magazine, covering investing and personal finance. From share tips, pensions, gold to practical investment tips - we provide a round-up to help you make money and keep it.
-
Michelin Key Hotels 2025: the top destinations in the world
The Michelin Keys have been awarded to spectacular hotels across the world. From Marlon Brando's private resort in Polynesia to a Bvlgari hotel in Tokyo, we look at some of the most extraordinary stays in 2025
-
MoneyWeek news quiz: How much could you get in car finance compensation?
The car finance scandal, inheritance tax, and house prices all made headlines over the past few days. Test your knowledge while reviewing this week’s top stories with MoneyWeek’s news quiz