Sometimes, when you're considering a new investment, it's hard to see the forest for the trees. But if you're looking for some extra diversification for your portfolio, a new exchange-traded fund that focuses on timber companies might give you exactly what you're looking for.
The Claymore/Clear Global Timber Index ETF
Chopping up the numbers
The Global Timber ETF tracks the Clear Global Timber Index, which includes 27 companies from 11 countries. U.S. companies make up more than a quarter of the index, but Canadian and Japanese companies also have significant presences. Brazilian pulp and paper products company Votorantim Celulose
Like other sector funds, the Global Timber ETF has the substantial risk associated with highly concentrated investment portfolios. In addition, the fund's global exposure exposes investors to legal and regulatory conditions around the world. The fund's 84% exposure to the materials sector makes it particularly vulnerable to a downturn in that sector.
Yet as a small part of a diversified portfolio, the Global Timber ETF may help improve the overall risk structure among your investments. It may be a specialty fund, and it may be just one tree in the gain exposure to a unique asset class.
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Fool contributor Zoe Van Schyndel lives in Miami and enjoys the sunshine and variety of the Magic City. She does not own any of the funds or securities mentioned in this article. The Motley Fool has a disclosure policy.
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