Today we examine the “Timber/Forestry” sub-sector of ETFs, and currently there are two ETFs that are available to investors in this category.
The iShares S&P Global Timber & Forestry (NasdaqGM: WOOD) is the largest in terms of assets under management at $182 million currently, followed by Guggenheim Timber (NYSEArca: CUT) which has about $150 million invested.
WOOD, while only averaging about 19,000 shares traded on an average daily basis, is composed of reasonably well-known, and liquid underlying companies including WY (9.66%), RYN (8.95%), PCL (8.60%), WFTBF (6.03%), and PCH (5.24%).
The complexion of the basket is slanted about 52% towards U.S. domestic companies, with the remaining 48% invested in European, Latin American, Asian, Canadian, and African based companies in this industry.
WOOD has a “mid cap” bias, with approximately 53% of the underlying index being invested in mid cap names.
CUT tracks the Beacon Global Timber Index, and averages about 58,000 shares traded daily. Some of the top five holdings resemble the composition of WOOD, currently looking like the following: WY (5.67%), WFTBF (5.23%), RYN (5.10%), PCL (5.08%), and FBR (5.06%).