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The New York Times has an interesting article on investing in timberland, focusing mostly on its purported lack of correlation with stocks. Timberland is indeed an interesting investment - but also frustrating for small investors. Unlike so many other investments, this one is hard to approximate without actually owning and maintaining the trees yourself.

The great thing about trees is the most obvious: They continue to grow when they're not wanted. So, if the market for timber is soft, you leave the trees to grow bigger and more valuable. Big U.S. endowment funds are big holders of timberland, and GMO LLC's Jeremy Grantham - we've mentioned him often in this blog - is also a big fan.

Small investors have a number of timberland opportunities available to them. For people who like the diversification delivered by exchange-traded funds (which resemble mutual funds but trade like stocks), there's the Claymore/Beacon Global Timber index fund and the iShares S&P Global Timber and Forestry index fund .

The problem? Both funds track stocks that have an indirect association with timberland. OJI Paper Co., as the name suggests, is a pulp and paper producer. Weyerhaeuser Co. is a diversified company with real estate and wood products operations.

As well, the relative performances, far from zigging when the broader markets zags, have followed the S&P 500 fairly closely over the past two years (both funds are relatively new, making longer-term comparisons difficult): The Claymore fund has fallen 8.3 per cent, after factoring in dividends, and the iShares fund has fallen 18.7 per cent. By comparison, the S&P 500 has fallen 15.5 per cent, suggesting that these particular timberland investments haven't made timberland investing look particularly attractive.

Meanwhile, many of the stocks of timberland companies have their own issues, and have similar correlations with the broader market. Plum Creek Timber Co. Inc. , technically a real estate investment trust (or REIT), has fallen 10.9 per cent over the past two years. And Canada's TimberWest Forest Corp. , plagued by financial issues, has fallen 70.5 per cent.

Rayonier Inc. , an internationally diversified timberlands company, appears to be a notable exception though. The shares have risen 14.9 per cent over the past two years, and the company remained profitable even during the difficult days of 2008.

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