There are two main ways you can invest in forestry.
You can invest directly into the ownership of the trees (which normally also includes ownership of the land on which the trees are growing), or indirectly through shares in a listed forestry company or other managed fund. We refer to these two options as ‘direct’ and ‘indirect’ investment.
Forest Enterprises’ investments are a direct investment and do include ownership of the land. Although the direct and indirect investment options share a number of key characteristics, the most important being their sole focus on plantation forestry (mainly Radiata pine), they also have important differences.
Direct forestry investments normally focus on one block of land, comprise a group of investors and relate to one rotation of trees. A crop of trees is planted, tended and eventually harvested from the block of land by a manager on the investors’ behalf.
The investors are closely involved with their forest and participate in decision making. They can identify directly with their forest, visit it if they choose, and they know exactly where their money is going and what it is being spent on. Because they are growing one crop rotation there is no income from the forest until harvest, which occurs at the end of the investment. Investors therefore have to fund the cost of the work occurring in their forest each year and do not receive annual dividends.