Timber doesn’t get the headlines of steel and copper, but it is a necessary component to the world economy. This makes timber-focused exchange traded funds (ETFs) an appealing idea as global economies continue to grow.

The old-fashioned way of investing in timber was by buying wooded acreage and a timber company would periodically pay you to harvest your trees, remarks Bruce Vanderveen for Seeking Alpha. Today, thankfully, things are a little more simple for investors who want to play timber.

ETFs are a lot easier. The Claymore/Beacon Global Timber Index (NYSEArca: CUT), currently up 38.3% year-to-date. CUT tries to reflect the performance of the Beacon Global Timber Index. The fund invests 90% of its money in worldwide timber and wood product companies and no company constitutes more than 5% of holdings.

Timber is used for packaging, paper, building materials, heating and furniture construction. Most of CUT’s holdings are in packaging companies, which is dependent on the overall health of the economy, while home construction and furniture are more cyclical industries. Wood is also being used as an alternative to propane in rural areas.

Currently, consumer spending is low, meaning that packaging demand is also low. But CUT could show further improvements when the health of the global economy improves.

Another timber-related ETF to consider is iShares S&P Global Timber & Forestry Idx (NasdaqGM: WOOD), which is currently up 20% year-to-date. The fund holds companies engaged in the ownership, management or upstream supply chain of forests and timberlands. Its industry weightings are heaviest in paper and forest products and real estate investment trusts (REITs).

For more information on the timber industry, visit our timber category.

Max Chen contributed to this article.

Tags: Commodity ETFs, CUT, Sector ETFs, Timber, WOOD