By Tim Gray
Trees don’t watch the stock market. Forests keep growing — and potentially increasing their value — even when inflation surges or the market swoons.
Big investors, like university endowments and insurance companies, have long allocated money to timberland in places like Oregon’s fir-and-spruce forests, Georgia’s pine plantations and Appalachia’s hardwood groves.
Until a few years ago, retail investors were mostly shut out of this market. The deals were too big, involving thousands of acres and tens of millions of dollars.
That changed over the last 15 years with the introduction of two timber-focused E.T.F.s — the iShares Global Timber & Forestry E.T.F. and the Guggenheim MSCI Global Timber E.T.F. — and the evolution of big forest-products companies like Weyerhaeuser and Rayonier. Today, the big timber companies are organized as real estate investment trusts (R.E.I.T.s) focused on managing forestlands, having sold off many other operations.
Ordinary investors can now put money into timber without venturing into the woods. Buying shares of an E.T.F. or a R.E.I.T. won’t replicate the benefits of directly owning vast timberlands, but it does enable one to bet on timber.
And there’s an old-fashioned option: buying a little woodlot of one’s own. That’s more akin to a part-time job than a passive investment, but it can yield financial gains.