World’s pensions hugging trees in quest for portfolio diversification
Apr 23rd, 2009 | Filed under: Editor's Pick, Today's Post
Here’s an investment strategy perfect for Earth Week: hug a tree. According to some estimates, owning trees would have produced over 13% per annum with low vol over the past 100 years.
This fact isn’t lost on the world’s pension fund community. Mercer’s recent report on European pension fund asset allocations shows that “timber/forestry” allocations are relatively small, but are now in the same quantum as other more recognized alternative assets (far right side of chart):
Uncorrelated returns – even in 2008
In a year when many previously uncorrelated alternative assets became suddenly and mysteriously correlated, timber kept on growing. A recent article by JP Morgan (available here at P&I) makes the case (that’s the NCREIF timber index in yellow): More…
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There are many good points in this article, but it commits the fallacy (AKA, “timber industry propaganda”) of equating trees with forest ecosystems. Trees are a renewable resource; an old growth ecosystem isn’t. An old growth ecosystem takes hundreds of years, and several ecological cycles, to develop. Sustainable harvesting of trees is a good idea, but it doesn’t address the environmental concerns with cutting in ancient forests.
[...] Interesujący tekst o inwestowaniu w las. To jedyna klasa aktywów, która niezależnie od koniunktury gospodarczej rośnie, dosłownie, od 3% do 5% rocznie. [...]