Introduction

Timberland investments have emerged as an asset class over the last three decades. U.S. institutional investors started making timberland investment allocations in the early 80’s, driven by two key factors:

  • changes in pension funds regulations, in the 70’s, stimulating portfolio diversification beyond the traditional fixed income strategies; and
  • intensification of the timberland divestment trend by forest products companies.

In 2010, global institutional investments in timberlands were estimated between US$ 50 and US$ 60 billion. This sum represents an impressive growth for the asset class, which was estimated to be no larger than US$ 1 billion by the late 80’s.

Along with public and private pension funds, insurance companies, endowment funds and family offices are the main timberland investors.

 

Timberland investments under management by investor profile

Posse_Florestas_USA_ENG

Sources: TimberLink; J.P. Morgan Investment Analytics & Consulting; International Woodland Company; 2010

 

In Brasil, timberland investments represents a developing asset class, and, not unlike the U.S. in the early 80’s, the majority of the country’s planted forests are still owned by the large forest products companies, such as the pulp and paper, steel and wood panels industries.

 

Timberlands by owners’ profile

Posse_Florestas_Brasil_ENG
Source: Consufor; 2012; Timberland ownership by value (R$)