Where does money grow on trees?

As kids we were all told that money does not grow on trees.  As of late one of the strongest sectors of the global economy has been trees.  OK not trees but the timber industry is in full stride.  There are a number of factors that could be driving the performance.

Planting roots

The big endowments in the U.S.have long held investments in timber for its low correlation to other major asset classes.  The fact that more investors are aware of the diversification that adding timber to a portfolio brings could be driving demand.  More likely though is the global demand is rising. As the emerging markets of the world are modernizing the demand for wood and paper products has risen and will continue to rise.  As well, the land on which the timber grows is worth something and in demand.

ETFs to grow on

iShares S&P Global Timber & Forestry Industry Index (ticker WOOD) is one play on timber.  WOOD is comprised of 25 companies that own, management or supply stream of forests and timberland.  WOOD is up over 29% in the last month and is well above both its 50 and 200 day EMA.

Charts courtesy of StcokCharts.com

Claymore Beacon Global Timber Index (ticker CUT) is another play on timber.  CUT is comprised of 30 companies from around the world that own or lease forest land and harvest timber.  CUT is up over 24% in the last month and is also well above its 50 and 200 day EMA.

Chart courtesy of StockCharts.com

Disclosure Statement: ETFGPS is a blog that Navigates The World of ETFs. Sustainable Investment Strategies LLC is a Registered Investment Adviser in the State of Maryland, and does not hold positions in the ETF(s) listed above at the time of writing. Investors who are interested in money management services may visit the Sustainable Investment Strategies LLC web site.

Tagged as: CUT, Emerging Markets, Timber, WOOD