November 23, 2012 (www.investorideas.com newswire) Sustainable Capital Reports on Forestry Investments: Organisations are buying into agricultural and agro-forestry investments as they reduce exposure to public equity risk and seek more fixed income returns. These are often strategic long term investments with sustainability being key criteria, investors are looking for "climate friendly", sustainable and real assets with a minimum projected financial return of five percent per annum.
The UK the Environment Agency Pension Fund (EAPF) recently announced they will be investing in real assets including "farmland, forestry and timber", areas previously not pursued by this particular pension fund. Furthermore they were looking globally for investments, recognition of the opportunities that exist in this growingly important asset class.
Pension Funds in Scandinavia and Canada commonly use forestry as an asset in pension portfolios; investment managers’ value forestry assets in a similar fashion to bonds i.e. value retention with income generation.
Some UK local Government Authorities have openly stated that their interest in forestry assets due to their use as a possible hedge on inflation, as well as the appeal to trustees who often view trees as serving a social purpose whilst also being an investment.
These strategic market developments are taken as positive endorsements by the professional team at Sustainable Capital in Luxembourg .
"Portfolio diversification is more important than ever for investors but adding a few more equities to a portfolio, or another real estate asset is not efficient diversification" stated Michael Young CFA, Director of Sustainable Capital. "Previously investors diversified using a variety of real estate assets, equities, high-yielding bonds and currencies but we saw in 2008-09 that all these asset classes fell in tandem. Forestry and agriculture assets offer a different return and volatility profile to traditional portfolio constituents".
Sustainable agriculture and agro-forestry is not correlated to traditional stocks and shares has been a boom factor since the economic and banking sector crisis. Michael Young goes on to explain how "by creating a fund with diverse natural resource investments across different species, regions and markets the overall risk is dissipated thereby giving greater security and improved risk adjusted return potential for investors".
However forestry and agriculture as an asset class is better suited to sophisticated investors who understand the return, risk, liquidity and investment horizon characteristics of the projects. A medium to long term investment period is required; often in excess of seven years before an exit opportunity presents itself.
The team at Sustainable Capital aims to help investors access easily understood entry points into this more specialist sector that is now gaining mainstream acceptance.
About Sustainable Capital
Sustainable Capital was founded in Luxembourg on the belief that corporate and social responsibility plays a key part in today's investment decisions. They provide independent advice and valuations on acquisitions, management and other tailored projects within the Agricultural and Forestry sectors. They possess a strong understanding of multicultural and diverse plantation projects especially those geared to domestic and commercial demands within the countries in which they operate. Sustainable Capital Luxembourg S.A. is the Investment Advisor to the Sustainable Resources Fund // www.sustainablecapital.lu
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