Most vernaculars, from English to Chinese, have an equivalent to the phrase ‘do not put all your eggs in one basket’. The heuristic of having too many baskets, or the right kind of baskets, is less obvious. Perhaps that’s why the risks of over-diversification have been slower to gain acceptance.
This issue of Frontline provides an illustration for deciding whether a basket is worth adding – in this case, timberland.
On certain metrics, forestry does not seem worth the hassle for an alternative assets portfolio. But when taking into account the nature of an investor’s journey – how far must they go, what obligations must they address along the way –reveals a rather different picture.
As ever, if you have any comments about our analysis or questions about Pevara, don’t hesitate to get in touch.
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Download: The role of timberland in a portfolio