SEB has launched The Forst Invest – Waldfonds SCA SICAV-SIF, the first fund that makes forest investments exclusively in Germany. The open-ended fund under Luxembourg law is designed for institutional investors, especially life insurers as well as provident and pension funds.
Thanks to its low correlation with other asset classes, a low level of volatility and stable returns, this fund is highly suitable for portfolio diversification purposes for professional capital investors. The initial subscription period ends October 31, 2011.
The fund assets will predominantly be used for the acquisition of forest land and forested areas. The fund’s income is generated from ongoing lumber marketing, which is benefiting from rising global demand and increasing use of wood as a source of energy.
The value added by forestry investments primarily results from biological growth of trees but also from the constant surge in lumber prices as well as changing valuations of land. Thanks to the sustainability of forestry introduced 200 years ago, Germany today is one of the countries with the highest volume of lumber supplies in Europe, and there is robust demand on the lumber market for German wood resources. The fund management aims to modify forestry cultivation to create more stable and profitable permanently mixed woodlands. Among the uncertainty factors associated with the forestry fund are a lower-than-forecast growth performance of the forests as well as potential damage to parts of the forests under cultivation, such as by pests, storms and forest fires.
In cooperation with the European Fund Administation, SEB is responsible on behalf of Forst Invest – Waldfonds SCA SICAV-SIF for the launch of the fund as well as administration, accounting, price calculation, invoicing and tax reporting. Moreover SEB operates as a custodian bank and paying agent. Accordingly, SEB provides all services concerning the launch and marketing of the forest fund from a single source and assists the investment managers to administer the fund more efficiently.
Andreas Fiedler, Head of Local Institutions SEB AG, asys: "Forest is an ideal long-term investment class. It is the perfect match for SEB’s sustainablitity orientation. Deutsche Forst Invest delivers a compelling performance with its economic and ecological value added conversion of monoculture into permanent mixed forest assets. In collaboration with SEB, this is the first time the concept of investing exclusively in German forests is being implemented."
Nils Weber, Managing Director of Deutsche Forst Invest GmbH, says: “Investing in forests reduces volatility and leverages the efficient edge of a diversified portfolio. Forestry is therefore considered a basic investment among successful institutional investors thanks to its exceptional risk-return ratio. In a long-term historical comparison, forestry investments generate yields averaging 5-7 percent per annum. Their low correlation with conventional capital investments makes investments in lumber additionally attractive, particularly in phases of violent turmoil on the capital markets. We opted in favor of SEB as a partner for the forestry fund since SEB is a bank that operates with sustainability in mind and it supports our pioneering work, which is why it is a perfect match for us.”