The Forestry Investment Total Return (FITR) Index

There is an emerging global trend toward more responsible and sustainable investment practices that is creating an increased appetite for forestry investments. This is against a backdrop of a dearth of forestry investment performance data of the kind suitable to aid econometrically significant investment projections. This article uses historical roundwood timber and lumber price data combined with a forestry discount rate to synthetically create historical forestry investment returns for the last two centuries. A Forestry Investment Total Return (FITR) Index is created from these data. A key advantage of the index is not relying on smoothed timber prices, making returns more representative of their reporting period. The FITR Index shows forestry investment outperforming equities over long durations, with a lower standard deviation of returns and a positive, rather than negative, skew of returns. The article suggests that responsible and sustainable investments can produce strong investment performance.