Managed Timber

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May 20, 2010 1:45 pm

What are people's thoughts on Managed Timber as an asset class?  I haev been following it recently, and am considering it given the extreme volatility in equities, and weakness in fixed income.  Specifically I am looking at WOOD and CUT.

May 22, 2010 11:52 am

I have never used it but my understanding is that Endowments use it as an asset class pretty heavily. The primary issue is time horizon. The physical asset class is typically illiquid and requires long horizons (i.e. perputual like an endowment). The REITS may offer what you are looking for. The REITS correlate to housing information so it's a good play on a housing recovery if you feel it's underway.

May 22, 2010 4:14 pm

WOOD and CUT are both ETF's that specialize in timber (mostly logging REIT's and paper companies)

May 22, 2010 4:14 pm

WOOD and CUT are both ETF's that specialize in timber (mostly logging REIT's and paper companies)

May 22, 2010 7:09 pm

The question I have with the WOOD ETF is what is the upside? It is currently at 38 and at the height of the housing boom it was 49. It pays no dividend so that appreciation would seem like the absolute top given the level of housing starts at the height. I would think that investing in Plum Creek Timber or some other REIT with a good dividend would give better overall returns.

May 22, 2010 10:02 pm

the endowments buy private companies not etfs. Huge difference

May 23, 2010 3:35 pm

You're right, but the options for retail advisors are limited.  However, I imagine Timber ( as a class) is going to end up being like commodities, long-short funds, gold, etc (many years ago).  If it is determined to be popular enough, all the ETF and fund companies will start creating them.  

May 23, 2010 3:35 pm

You're right, but the options for retail advisors are limited.  However, I imagine Timber ( as a class) is going to end up being like commodities, long-short funds, gold, etc (many years ago).  If it is determined to be popular enough, all the ETF and fund companies will start creating them.  

May 24, 2010 8:34 am

I think this is where retail investors run into problems, trying to take a shorcut to replicated something..