Ex-Morgan Stanley MD: money does grow on trees, actually

A view of woodland

A view of woodland CREDIT: CULTURA RM EXCLUSIVE/GARY JOHN NORMAN/ GETTY

Specialist asset manager Gresham House has a clear message for anyone who’s been told that money doesn’t grow on trees: they’ve never been more wrong.

With Theresa May expected to trigger Article 50 on Wednesday, Gresham fund manager Richard Davidson said there’s never been a better time for investors to place their bets on the country’s forests.

Davidson told The Daily Telegraph that returns in forestry could increase off the back of Brexit because the fall in the pound has made UK timber more competitive than foreign imports.

Trees are also being seen as a safe bet amid the economic turbulence associated with the vote, said Mr Davidson, who used to manage Morgan Stanley Investment Management’s $7bn Global Asset Allocation fund.

Timber
The fall in the pound has made UK timber more competitive than foreign imports

“It is attracting interest, ” he said. “Compared to some other socially responsible investments this is an area with low volatility but which is reasonably predictable – we know how quickly the trees grow [regardless of what the financial markets do].”

The UK is the world’s third largest net importer of timber behind China and Japan and is expected to hit a supply shortfall in ten years time, Mr Davidson added, pointing out that this could also drive up returns.

The UK forestry index shows a total return of 14.7% per annum for the three year period 2013 to 2015, and an annual return of 10.8% for 2015. The Church of England is among the institutions known to have a large forestry portfolio.

“Increasingly the market is becoming more institutional and is viewed as a timber investment not a tax-preferred investment [as it once was],” he said.

[“Source-telegraph”]