Independent commodity investment firm Diapason Commodities Management is to launch the ForestCare Investment Fund, an institutional product investing in tangible forestry assets.
The ForestCare investment universe will cover forest plantations and resulting activities and services such as forest management, wood production and processing, and all investments will be subject to a strict environmental, social and governance (ESG) filter prior to being included in the portfolio.
The fund will take a multi-asset class approach, investing in equities, bonds, forest plots, and forest-related derivatives. Forest plots will form up to 20 per cent of the portfolio where revenue will come from both forestry products and capital gains, and will include plots or land leases exclusively in Europe (land partially or totally covered by forest) to take advantage of the comparatively low levels of private forestry investment in this region.
As well as the ownership and operation of European forest plots, the fund will also invest in shares and bonds of companies operating responsibly in the forestry industry, as well as bonds of public and private sector debtors issued to finance projects in this sector. Also included will be forest-related derivatives and other investment instruments related to the forestry theme, including biodiversity credits, credits related to mitigating deforestation (REDD credits) and carbon credits.
Mark McDonnell, managing director of Diapason Commodities Management, says: “ForestCare is a completely new way of approaching investment in forestry and with our approach to bio-diversity in forests this investment opportunity has forest sustainability at its core. Crucially, the fund is structured to reconcile economic profitability with the need to make intelligent use of natural resources – providing investors with a diversified portfolio which is uncorrelated with other asset classes.”
ForestCare is aimed at the pension fund and institutional investor market and will have three monthly liquidity and a minimum investment of EUR125,000 for the A class and EUR1,000,000 for institutional (I) class.