Lumber ETFs offer investors a simple way to gain exposure to the timberland and lumber industries without buying individual stocks. These funds typically hold shares of companies involved in timber harvesting, wood products, and forest management, providing broad access to the sector.
Timberland has long been viewed as a potential hedge against inflation, while lumber demand tends to rise with economic growth and housing activity. Together, those dynamics make lumber ETFs an appealing option for investors looking to diversify their portfolios with real-asset exposure.
Below, we’ll break down how lumber ETFs work and what to consider before investing in them.
Top lumber ETFs
NASDAQ: WOOD
Key Data Points
Its top holdings also include diversified wood products companies and those that produce lumber, plywood, pulp, newsprint, wood chips, and other wood products. The fund offers global diversification (only 34.1% of its holdings are U.S. companies).
Investors should consider the iShares ETF's expense ratio. At 0.4%, it charges a reasonable management fee. Meanwhile, the fund offers a dividend, with a yield that was almost 3% in early 2026.
2. Invesco MSCI Global Timber ETF
NYSEMKT: CUT
Key Data Points
Benefits and risks of investing in lumber ETFs
Investing in lumber ETFs has pros and cons.
Benefits
- Inflation hedge: Timber demand and pricing tend to benefit from inflation.
- Growth: Housing demand tends to be a key growth driver of lumber. As a result, lumber is a way to invest in the growth of housing demand.
- Income: Lumber ETFs typically own timberland REITs and other lumber companies that pay dividends, making it a source of passive income.
- Diversification: Lumber ETFs enable you to invest broadly across the lumber sector.
Risks
- The potential for underperformance: A lumber ETF has the potential to underperform a top lumber stock.
- Fees: Lumber ETFs charge fees to provide investors with broad exposure to the lumber market, which will eat into your returns over the long term.
Factors to consider before investing in lumber ETFs
Before buying a lumber ETF, investors should focus on a few key factors:
- Fund focus: Some ETFs tilt toward timberland REITs, while others emphasize wood products manufacturers.
- Expense ratio: Higher fees can meaningfully impact long-term performance.
- Alternatives: In some cases, owning a small basket of individual lumber stocks may better match your strategy.
How to invest in lumber ETFs
Anyone can invest in lumber ETFs. Here's a step-by-step guide on how to add one to your portfolio:
- Open your brokerage app: Log in to your brokerage account where you handle your investments.
- Search for the stock: Enter the ticker or company name into the search bar to bring up the stock's trading page.
- Decide how many shares to buy: Consider your investment goals and how much of your portfolio you want to allocate to this stock.
- Select order type: Choose between a market order to buy at the current price or a limit order to specify the maximum price you're willing to pay.
- Submit your order: Confirm the details and submit your buy order.
- Review your purchase: Check your portfolio to ensure your order was filled as expected and adjust your investment strategy accordingly.
Outlook for the lumber industry
The lumber market has faced headwinds in recent years, including high mortgage rates and tariffs on Canadian imports that pressured U.S. demand. While early signs of stabilization emerged in 2025, uncertainty remained in early 2026 around when housing activity and renovation demand would fully recover.
Longer term, lumber demand should track housing growth, population trends, and construction activity, making the sector cyclical but potentially rewarding for patient investors.
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FAQs on lumber ETFs
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