In the press... FT's Money Management June 2011

FT - Money Management. May 2011
Ethical Forestry reviewed in the FT's Money Management "Investing In Forestry - Growing Opportunities" special edition.

"Another option altogether is based on the premise of buying a number of individual trees such as the plans run by Ethical Forestry The Acacia 10 Year Investment Plan allows investors to purchase 300 trees in Costa Rica for £18,000 with the option to buy additional trees at £6,000 per 100. The plan pays out annually from year four onwards by beginning to harvest the trees, the projected proceeds rising from £1,737 in year four to £58,476 in year 10 with a total accumulative amount of £93,642.  

The Acacia 22 Year Investment Plan works in the same way but pays out from year 11, the projected amount starting at £1,174 in year 11 and climbing to £280,371 in year 22. As well as harvesting to create income, this plan also incorporates a rapid planting phase during years 6-11 to increase the investment returns for later in the plan. Interestingly, the plan also allows for investors to require any number of their trees to be harvested at any time they choose.
These plans are approved for SIPPs and can be used as a good diversifier. The long term approach of these investments makes them one possible option for investors wanting timber assets in their pension, whether for ethical reasons or simply because forestry has good potential returns. According to the company, around 50% of its funds are held in SIPPs and 50% are not.

One further option about to be launched by Ethical Forestry is the Melina plan.  This will be a 12 year plan, again with a minimum investment of £18,000 and with trees harvested and income provided every two years from year four onwards. The projected returns after the 6% fee on each payout rise from £5,749 at year four to £61,978 in year 12. This represents a total projected payout of £104,109 equivalent to a yield of 15.7% pa.

As the trees are based in Costa Rica there is a tax of 15% payable in the country. This tax can be reclaimed in the UK through HMRC on form DT5201.

The yields projected by this fund are based on a timber price estimate of £0.35 per board foot increasing at a rate of 7% annually. This is not guaranteed, however, as the open market prices for timber could vary at any time. There are also the usual risks associated with forestry, but Ethical Forestry says that it protects as far as possible against fire, flood and hurricanes".

Article type: Editorial