With news of pension funds propping up their portfolios with barrels of vintage whisky and fine wines becoming more popular, investing in stocks and shares sounds boring by comparison.
If you also consider the urge to go green that many of us feel, then the attractions of investing in forestry are apparent.
However, this is not just an unfounded, feel-good idea. The latest results from the IPD UK Forestry Index show that you can have a social conscience and a respectable return on your green investments.
The Index has been running for 18 years, and the figures for last year have been the fourth best in that period. Overall, the index rose by 11.1%, which was a significant improvement on the already healthy 7% for 2008. Commentators have noted that these results compare favourably with equities, commercial property and fixed income investments.
The price of timber has fluctuated during the last year, perhaps as a result of the nervousness that exists generally in the property markets – historically demand for timber has been dependent on this. However, in 2009 the matter came down simply to a question of demand and supply. Given the push towards renewable energy and the need for sustainable materials to be used in construction, demand continued despite a commercial property wobble.
The only cloud on the horizon may be uncertainty about what is going to happen in the euro zone. It seems that even the cool Scottish pine forests have not been unaffected by the heat of the Southern European countries’ austerity measures. Currency fluctuations have also caused uncertainty in the timber market, so predictions from timber suppliers for the potential for very large price increases across 2010 and 2011 may turn out to be unfounded and impossible.
However, one truth remains: more and more corporations and public sector bodies have made commitments about tackling climate change. Accordingly, as part of the sustainable energy and construction industries, forestry has to be worth keeping an eye on.
