Exchange Traded Fund (ETF) provider iShares has launched the first ETF to invest in timber and forestry.
The iShares S&P Global Timber and Forestry fund will offer investors access to 25 of the largest publicly traded companies in the timber and forestry industry.
In addition, iShares has also announced the launch of iShares MSCI Latin America, which will invest in up to 89 firms across South America, including companies in Brazil, Mexico and Argentina.
The dual launch brings the total number of iShares trading on the London Stock Exchange to 52.
The iShares Global Timber and Forestry ETF will offer investors access to S&P Timber and Forestry index, which comprises of firms ranging from timber REITs and forest product companies, to paper packaging companies.
In addition, all the companies in the index own and manage their own forest land.
Frank Henze, head of product development for iShares, says the timber sector has consistently returned over 70% since 2002, outperforming the MSCI World index.
“As ‘timber’ companies make up over half of the index, it is worth noting that as a sector, timber has proven to provide both favourable returns and low volatility.
“For small and mid-sized investors, who have traditionally not been able to access the timber market, they are now able to tap into some of the benefits flowing from companies in both the timber and forestry industry.
“Meanwhile large investors, who have been able to access the market directly, now have the tactical advantage of a highly liquid, transparent and flexible vehicle to use to meet short and medium term investment objectives.”
On the launch of the Latin America ETF, Henze adds: “The story of Latin America in recent years has been one of growth, largely driven by global economic growth and strong commodity performance.
“In addition, global demand for agriculture, energy and mining exports places Latin America in a position of strength as a resource-rich region, and this fund gives investors diversified and liquid access to this fast moving market.”
The iShares S&P Global Timber and Forestry ETF is the fifth fund in the iShares alternative product suite.
The four remaining funds are iShares S&P Global Water, iShares FTSE/Macquarie Global Infrastructure 100, iShares S&P Clean Energy and iShares S&P Private Equity.
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