WOOD: Outperformance Unlikely Due To Structural Weakness In Timber Industry

Ben Holden-Crowther415 FollowersFollow5ShareSavePlay(10min)CommentsSummaryiShares Global Timber & Forestry ETF (WOOD) has underperformed, with a 12% loss versus a 29% S&P 500 gain over two years.Ongoing structural weaknesses in the timber industry and a lack of historical compounding make WOOD unattractive versus broad market benchmarks.Within WOOD's holdings there is a degree of dilution of pure timber exposure, with significant allocations to packaging and materials sectors beyond forestry.The fund's 0.4% expense ratio and unreliable dividend yield further diminish its appeal. Aleksandr Potashev/iStock via Getty Images Investment Thesis My last article on iShares Global Timber & Forestry ETF (WOOD) was published nearly two years ago, and my prediction of poor long-term performance for the fund has proven soThis article was written byBen Holden-Crowther415 FollowersFollowI am an international analyst with a Buffett and Munger inspired approach to investing. My emphasis is on identifying high quality, shareholder-oriented companies which have been unfairly discounted by the market due to short term factors or irrational investor psychology. At the moment, I am particularly interested in legacy businesses considered to be in secular decline in sectors such as remittances, ATMs and tobacco, where cash generative, high yield stocks (often with under-appreciated revenue and earnings growth) are very often unfairly ignored. While emphasizing U.S. stocks, I also cover attractive opportunities within my own country (the UK) and globally.Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.