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.

ETF CUT

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.

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