Lumber ETFs are exchange-traded funds (ETFs) that provide investors with an easy way to gain exposure to the timberland and lumber industries. Land used to grow timber can help diversify your portfolio by providing a hedge against inflation. Meanwhile, lumber benefits from economic growth and the housing sector.
Investors have two ways to play a potential rise in lumber prices and timberland values. They can buy lumber stocks or a timber-focused exchange-traded fund (ETF). Here's a closer look at the two ETFs focused on the lumber industry: the iShares Global Timber & Forestry ETF (WOOD +0.87%) and the Invesco MSCI Global Timber ETF (CUT +1.20%).
1. iShares Global Timber & Forestry ETF (WOOD)
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 31.2% of its holdings are U.S. companies).
One factor investors should consider is 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 1.5% in late 2025.
2. Invesco MSCI Global Timber ETF (CUT)
NYSEMKT: CUT
Key Data Points
The five holdings make up a little over 25% of the total value of the Invesco ETF's portfolio. One of the biggest differences with the Invesco ETF is that it provides investors broader exposure to the wood products marketplace. Several of the largest holdings focus on maximizing the value of wood fibers by using them to make paper and packaging products, as well as lumber products.
The Invesco ETF also offers exposure to the timber market, led by timber REIT Weyerhaeuser (WY +0.74%) at its sixth-largest holding (5% weighting in the fund). The company is one of several holdings in the ETF that manage timberlands and/or operate lumber mills.
The Invesco ETF's broader approach to the lumber market has one notable benefit: It's less volatile since it has less direct exposure to the wild fluctuations of lumber prices. However, that also gives it slightly less upside potential in a rising lumber price market.
The ETF's expense ratio, at 0.67%, is higher than the iShares Global Timber & Forestry ETF. The fund also offers the opportunity to collect income (over 3% yield in late 2025).
Benefits and risks of investing in lumber ETFs
Investing in lumber ETFs has pros and cons. Here are some of the benefits of investing in these funds:
- 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.
On the other hand, here are some of the drawbacks of investing in lumber ETFs:
- 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.
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.
Related investing topics
Diversified ways to invest in lumber
Investors have two ETF options to play the potential rise in lumber prices. Both offer broad exposure to the sector but with slightly different twists. The iShares Global Timber & Forestry ETF has higher exposure to timber company REITs and has a lower expense ratio. Meanwhile, the Invesco MSCI Global Timber ETF offers broader exposure to the wood products sector, making it potentially less volatile. Either way, both ETFs should benefit from rising lumber prices, making them solid options for investors looking to profit from a potential surge in prices in the future.
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