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Should You Invest in the iShares Global Timber & Forestry ETF (WOOD)?

Sweta Killa
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Launched on 06/24/2008, the iShares Global Timber & Forestry ETF (WOOD) is a passively managed exchange traded fund designed to provide a broad exposure to the Materials - Timber segment of the U.S. equity market.

Retail and institutional investors increasingly turn to passively managed ETFs because they offer low costs, transparency, flexibility, and tax efficiency; these kind of funds are also excellent vehicles for long term investors.

Additionally, sector ETFs offer convenient ways to gain low risk and diversified exposure to a broad group of companies in particular sectors. Materials - Timber is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 4, placing it in top 25%.

Index Details

The fund is sponsored by Blackrock. It has amassed assets over $520.60 M, making it the largest ETF attempting to match the performance of the Materials - Timber segment of the U.S. equity market. WOOD seeks to match the performance of the S&P Global Timber & Forestry Index before fees and expenses.

The S&P Global Timber & Forestry 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. These include forest products companies, timber real estate investment trusts (REITs), paper products companies, paper packaging companies and agricultural products companies.

Costs

Since cheaper funds tend to produce better results than more expensive funds, assuming all other factors remain equal, it is important for investors to pay attention to an ETF's expense ratio.

Annual operating expenses for this ETF are 0.51%, making it the least expensive product in the space.

It has a 12-month trailing dividend yield of 1.06%.

Sector Exposure and Top Holdings

ETFs offer a diversified exposure and thus minimize single stock risk but it is still important to delve into a fund's holdings before investing. Most ETFs are very transparent products and many disclose their holdings on a daily basis.

Looking at individual holdings, Svenska Cellulosa B (SCAB) accounts for about 8.41% of total assets, followed by Rayonier Reit Inc (RYN) and Weyerhaeuser Reit (WY).

The top 10 holdings account for about 58.21% of total assets under management.

Performance and Risk

The ETF return is roughly 12.95% so far this year and it's up approximately 37.75% in the last one year (as of 05/05/2018). In that past 52-week period, it has traded between $58.43 and $82.68.

The ETF has a beta of 1.11 and standard deviation of 16.13% for the trailing three-year period, making it a medium risk choice in the space. With about 36 holdings, it has more concentrated exposure than peers.

Bottom Line

To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.


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Weyerhaeuser Company (WY) : Free Stock Analysis Report
 
Rayonier Inc. (RYN) : Free Stock Analysis Report
 
ISHARS-GL TF (WOOD): ETF Research Reports
 
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