Asset Class

In many countries of the world Forestry Investments are a traditional and highly respected asset class for institutional as well as private investors. Local climate and forestry specifics are driving the growth of trees and therefore to a large extend the profitability of forestry investments. Even though Central Europe is an important forest region with profound scientific and practical expertise, it is mainly for climatic reasons that profitability of forestry is limited in this region.

For international institutional investors such as pension funds or insurance companies, forestry is a common part of their portfolio since long (institutional investments in the US approx. 20 bn $). Due to their long term success fund managers of American universities (like Harvard and Yale) are highly respected. One characteristic of their portfolios is a significant share of alternative assets, and herein they are systematically invested in forestry.

Their investment objectives are typical for long term oriented investors: stable returns and high portfolio quality. In that respect long term oriented European investors and American universities are strategically aligned.

In the context of an international investment strategy, European investors are increasingly attracted by the asset class of forestry. It offers returns of historically 8-12% (IRR) with limited volatility and can improve the portfolio quality significantly.

Forestry Investments are a class of the “Real Assets” category. Due to its main value driver biological growth they offer a correlation close to 0 with traditional asset classes like fixed income and equities. They are known as inflation-sensitive and offered in the past as a “real asset” a natural hedge for inflation. Forestry Investments have the same characteristics that make real estate a traditional part of European institutional and private investors portfolio.

For a more detailed discussion and analysis please contact us directly.

Forestry Investments

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