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ETF Chart of the Day: Timber


Today we examine the “Timber/Forestry” sub-sector of ETFs, and currently there are two ETFs that are available to investors in this category.

The iShares S&P Global Timber & Forestry (WOOD) is the largest in terms of assets under management at $182 million currently, followed by Guggenheim Timber (CUT) which has about $150 million invested.

WOOD, while only averaging about 19,000 shares traded on an average daily basis, is composed of reasonably well-known, and liquid underlying companies including WY (9.66%), RYN (8.95%), PCL (8.60%), WFTBF (6.03%), and PCH (5.24%).

The complexion of the basket is slanted about 52% towards U.S. domestic companies, with the remaining 48% invested in European, Latin American, Asian, Canadian, and African based companies in this industry.

WOOD has a “mid cap” bias, with approximately 53% of the underlying index being invested in mid cap names.

CUT tracks the Beacon Global Timber Index, and averages about 58,000 shares traded daily. Some of the top five holdings resemble the composition of WOOD, currently looking like the following: WY (5.67%), WFTBF (5.23%), RYN (5.10%), PCL (5.08%), and FBR (5.06%).

One can note that CUT has more of an “equal weighted” look to it among its top 10 companies, compared to WOOD.

Another significant difference here is in terms of expense ratios, as WOOD charges 48 basis points versus CUT coming in at 65 basis points. YTD, CUT has edged out WOOD in terms of performance, up 13.06% versus WOOD rallying 10.00%, but in the trailing one year period WOOD has outgained CUT (+9.52% versus 8.66%).

iShares S&P Global Timber & Forestry

For more information on Street One ETF research and ETF trade execution/liquidity services, contact Paul Weisbruch at pweisbruch@streetonefinancial.com.