Paper Demand Bolsters Timber and Materials ETFs

With the recent flight from technology amid a September sell-off, exchange-traded fund (ETF) investors have to be wondering what other sectors they can turn to for gains. One area that’s been getting a  recent boost from increased paper demand is timber and material ETFs.

The recent sentiment towards technology is that the space has become too overpriced for its own good. As such, retail investors are looking at more value-oriented sectors like consumer goods.

“Paper and packaging stocks jumped Friday, buoying exchange-traded funds that focus on timber and materials. WestRock Company gained nearly 7% midday, making it one of the biggest movers in the S&P 500, with International Paper Company, up 5%, and Packaging Corporation of America, up 4.1%, not far behind,” a MarketWatch report said. “The Invesco MSCI Global Timber ETF gained more than 1% midday, while the iShares Global Timber & Forestry ETF was up 0.5%. The broad sector ETF that covers the industry, the SPDR Select Materials fund is the best performer of the 11 sector SPDRs over the past month, as investors have rotated away from pricey tech and consumer names toward stocks that are better value, and which stand to benefit from the new business cycle.”

Here are the two funds mentioned that investors can take advantage of:

iShares Global Timber & Forestry ETF (WOOD): seeks to track the investment results of the S&P Global Timber & Forestry IndexTM. The fund generally will invest at least 90% of its assets in the component securities of the underlying index and in investments that have economic characteristics that are substantially identical to the component securities and may invest up to 10% of its assets in certain futures, options and swap contracts, cash and cash equivalents. The index is comprised of approximately 25 of the largest publicly-traded companies engaged in the ownership, management or upstream supply chain of forests and timberlands.

WOOD Chart

WOOD data by YCharts

Invesco MSCI Global Timber ETF (CUT): seeks to track the investment results (before fees and expenses) of the MSCI ACWI IMI Timber Select Capped Index (the underlying index). The fund generally will invest at least 90% of its total assets in the securities that comprise the underlying index, as well as American depositary receipts (“ADRs”) and global depositary receipts (“GDRs”) that represent securities in the underlying index. The underlying index is comprised of equity securities of companies that are primarily engaged in the ownership and management of forests and timberlands and the production of finished products that use timber as a raw material.

CUT Chart

CUT data by YCharts

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