Nov
05

Cut Down Portfolio Risk with Timber

By
Robert Stammers – Investopedia

Ever consider buying trees to enhance your investment portfolio? Over the years, timber investments have gained interest from both institutional and retail investors for their diversification and inflation hedging characteristics, and as a sound alternative to stocks and bonds. The relatively inefficient timber market is continually evolving, creating new opportunities for investors to allocate capital for both income and appreciation.

The management of timberland is steadily moving from manufacturers of timber-related products to timber management organizations that have the technical and market knowledge to maximize yield, increase transparency and enhance investor return.

Since the early 1990s, a fundamental change in the ownership of commercial timberlands has occurred. Major manufacturers of timber-related products have historically owned timberlands to ensure access to the supply of trees. Increasingly, these companies are divesting their tree stock, and the associated management and farming issues, by selling it to investors and management companies with the financial and forest management knowledge to maximize production. Manufacturers can ensure access to supply by entering into supply contracts with owners. These supply contracts are usually made at pre-negotiated prices, allowing manufacturers to hedge movements and volatility in timber prices.

ARTICLE SHORTENED DUE TO LENGTH….

LINK TO ARTICLE HERE:

http://www.forbes.com/finance/2008/11/03/timber-plum-creek-pf-education-in_rs_1103investopedia_inl.html
Be Sociable, Share!
    Categories : National News

    Comments are closed.