Searching for Timberland

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    Stockholm (NordSIP) – There is a strong case to be made for real assets in the current inflationary environment. Long-term investments like timberland, for instance, can be an excellent fit for an institutional investor’s portfolio. The asset class bears the triple promise of sizeable real returns, sustainability advantages, and diversification benefits. Forests take decades to grow, and as they do so, they store carbon dioxide independently of the business cycle. This steady growth is also one of the reasons why timberland is used to diversify a portfolio and as an inflation hedge.

    A recent search launched by an institutional investor reminds us of just how attractive this niche type of investment can be. According to Global Fund Search (GFS), the platform facilitating the search, a Dutch institution is looking to allocate some EUR 100 million to a dedicated timberland fund. The client is interested in unlisted timberland equity only. They envisage a core portfolio, consisting mainly of timberland investments in the OECD countries (a minimum of 80 per cent) that, according to them, should be able to deliver a net total return of more than 6,5 per cent.

    - Partner Message -

    Both open- and closed-end funds are acceptable to the investor as long as it is possible to invest at least by the second half of 2023. Only funds targeting a size larger than EUR 250 million will be considered. Moreover, the investment vehicle should not be leveraged to more than 40 per cent at the portfolio level.

    An important fact to bear in mind is that a potential timberland manager aspiring to cater to the Dutch investor should be a UN PRI signatory. They should also be able to exhibit some solid experience, either through having managed a similar fund previously or having at least a five-year track record of investing in the field.

    It appears that the prospective investor has no time to waste. The strategy is to be implemented in the second or third quarter of 2023, and shortlisting is already underway. The deadline for submitting proposals is by midnight on 27 January.

    Image courtesy of Steven Kamenar on Unsplash
    Julia Axelsson, CAIA
    Julia Axelsson, CAIA
    Julia has accumulated experience in asset management for more than 20 years in Stockholm and Beijing, in portfolio management, asset allocation, fund selection and risk management. In December 2020, she completed a program in Sustainability Studies at the University of Linköping. Julia speaks Mandarin, Bulgarian, Hindi, Russian, Swedish, Urdu and English. She holds a Master in Indology from Sofia University and has completed studies in Economics at both Stockholm University and Stockholm School of Economics.
    - Partner Message -

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