Sustainable Alpha: Ecotrust's long-term forest vision
By Amrita Vijay Kumar and Bettina von Hagen, Ecotrust
Amrita Vijay Kumar is director of Ecotrust Forest Management.
Sustainable Alpha features shared conversations with the best minds, portfolio managers and industry leaders working to maximize returns while prioritizing the environment, social and governance factors — what’s become short-handed in the industry as ESG. Sustainable Alpha highlights portfolio approaches and investment trends against the backdrop of broader themes such as resource constraints, policy changes and demographic shifts — all while shedding light on how ESG can impact your investments.
Sustainable Alpha conversations are led by John Wrenn, Senior VP, Investments for UBS. The Wrenn Ferguson Group has a combined experience of 200 years managing over 1.6 billion in assets, offering customized wealth management strategies for individuals, endowments and foundations. View the rest of his conversations with leaders in the sustainable investment community.
Here's Wrenn's conversation with Amrita Vijay Kumar and Bettina von Hagen of Ecotrust Forest Management.
John Wrenn: Why invest in timber?
Amrita Vijay Kumar and Bettina von Hagen: There are many reasons to invest in the timberland asset class. Some of the most common cited reasons are the portfolio diversification benefits, the low correlation with other asset classes, tax treatments and the inflation hedging qualities of real assets.
However we believe the best attributes of timberland are its potentially low holding costs and its ability to store value on the “stump.” i.e. trees continue to grow, even when stock markets fall or when economic indicators are negative. Unlike annual crops, their harvest can be timed to coincide with favorable log-markets, and the patient, long-term investor can see through most economic cycles unscathed. Favorable tax treatments for timber harvest income also exist.
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