Ideally investors are looking to invest in assets that the world is going to want more of but the increase in supply is difficult. Forestry exactly matches these requirements.
Biological growth is always positive providing reliable capital growth of the forestry investment, a highly valued global commodity.
Biological growth is completely independent of all economic factors that affect financial markets thus preserving its value during times of financial market turmoil.
Forestry has the potential to offset the risk attached to the other main asset classes particularly the financial assets. By diversifying from traditional assets through forestry, investment returns can be increased while at the same time reducing risk.
Forestry is positively correlated to inflation and negatively correlated to deflation which implies it can be used as an effective hedge against inflation risk.
The future timber supply shortage and increasing demand makes forestry a compelling investment opportunity.
Unique Characteristics of biological growth.
The biological growth of trees is two dimensional:
1: Volume: As trees grow, they add volume and more volume means a higher return. Forestry investments can increase in value even if the timber price remains the same due to the increase in timber volume.
2: In Growth: As trees get older they grow less in height and more in diameter. Timber is a highly valued global commodity so as the diameter of the tree increases its value increases even more.