UK - The London Pension Fund Authority (LPFA) is upping the amount of cash it allocates to forestry.
The LPFA has pledged another £4m to the Phaunos Timber Fund to make its total exposure to forestry £10m. It invested the original £6m in the Phaunos Timber Fund last December.
Jones said the LPFA has decided to invest in forestry as it was looking for an asset class that was uncorrelated to the rest of its portfolio, ie “basically a long term inflationary hedge”.
Guernsey-based Phaunos Timber Fund is the first listed timber fund in Europe and raised $115m when it listed on the Alternative Investment Market (AIM) in December. Its backers include F&C Asset Management and Swedish pension fund Kapan. Phaunos is managed by Geneva-based Four Winds Capital Management.
The allocation of £10m to Phaunos is part of the £350m exposure to alternative assets that makes up 15% of the LPFA’s portfolio.
Phaunos aims for long term total returns, through a diversified portfolio of timberland and timber related investments, by seeking exposure to timberland on a global basis; diversification by tree species, age classes and geographical timberland markets.
The company has invested in developed timberland markets in politically stable countries, in at least three different regions of the world.
The company also used timber related instruments such as financial futures, options, warrants and swaps, the return on which is linked to timber related indices or other timber related instruments or vehicles.