Assets that can deliver stable long-term returns while also generating income and offering protection from inflation are hard to find in traditional equity and bond markets. Investors have instead turned to real assets, such as real estate, infrastructure and transportation, as sources of long-term stable returns that are positively correlated with inflation.

An equally valuable but much less commonly used real asset strategy is timber investment – growing and harvesting trees for construction and other uses. While the basic investment case for timber goes back to antiquity, this ancient resource is now gaining attention for a decidedly modern purpose: the sequestration of atmospheric carbon.

In this article they explore the strategic case for timber in an asset allocation, taking a closer look at how timber investing delivers attractive risk-adjusted returns through traditional channels and how the more recent focus on sustainability may add a new element to the value proposition.

As a metaphor for investment, the slow and steady growth of a sapling to a tree is obvious. As an actual investment, timber offers more than just patient growth.

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