A stock market expert has published a report that analyses the benefits of specialist exchange traded funds (EFTs), such as those that enable people to make forestry investments.
William Wordie, writing for the Press and Journal, claims that forestry investments and other EFTs are growing in popularity because people can spread their investments easily and at a much lower cost than traditional funds.
Wordie cites an academic study from 1986 which showed that the vast majority of returns could be explained by asset allocation. ETFs such as timber investments allow investors to easily target an asset class, with more flexibility and accuracy than either an index or actively managed funds. Timber and forestry investments offer investors transparency, efficiency, and above all flexibility:
Efficiency comes from with low annual management fees with no hidden costs. There are no fees for buying or selling forestry investments other than those charged by the stockbroker.
Transparency comes from the continuous access and competitive bid prices. It is the same as trading single stocks in this respect.
Finally, flexibility comes from trading size. A forestry investment is possible from just one share upwards and it’s easy to trade shares through a stockbroker.
Forestry and timber investments can be included in Isas (Individual Savings Accounts) and Sipps (Self Invested Pension Plans) for tax benefits.