What percentage liquidity does the fund have?
The fund aims to hold around 10-15 % liquidity in cash or under liquidity management. There is a redemption routine whereby the investor whishing to redeem must surrender a redemption notice 60 days prior to one of the four redemption dates (each quarter) in order to receive funds within 30 days after the dealing date. Both this built in notice period and the liquidity strategy is an important part of being able to manage redemptions with investments in slow-moving assets. If there are massive redemptions in a short period of time the fund may use credit lines or simply harvest to produce cash.
What is the relationship with luxembourg?
The fund has two share classes – Class B and D – listed on the Luxembourg Stock Exchange.
WHO conducts the valuations of the brazilian plantations?
In Brazil there is a system of licensing of agro-forresters called CREA. Only CREA licensed foresters conduct the annual valuations of the plantations in Brazil based on standing timber volume and using the lowest price per cubic meter the last five years.
Where are the fund holdings in the baltic states located?
The Baltic holdings are located in eastern Latvia.
Where exactly are the platations in brazil located?
The plantations are located in the north of Brazil, in Santo Antônio do Tauá in the state of Pará. See map: https://goo.gl/maps/4yU5pFdoeG92. Closest shipping port is Belem, usually referred to as ”the port to the Amazon” which is only one hour away.
What are reits?
REITs (Real Estate Investment Trusts) form part of the liquidity strategy. They are liquid tradable papers backed by forest ownership. So instead of holding funds in cash the fund may invest in REITs. However, all REITs are issued in USD and because the fund during the last year has changed base currency, closed the SEK Class and we have seen quite some FX fluctuations the last year there has not been any investment into REITs.
What exactly do the returns come from?
Clearly it is not feasible to conduct valuations of the fund holdings on a monthly basis. Yet, the fund is monthly traded so there must be some kind of input to the monthly valuation. This was one of the focal points when creating the fund – to find a measure to reflect the biological growth. Since the biological growth is most notable in tropical timber, both in terms of volume and value, we sought to make agreements with local forest management companies in Brazil whereby they manage the plantations and agree to pay a fixed annual income that is conservatively set far below the biological rate, which is 15-25 % per annum depending on tree age range and price. About half of the plantatons are managed under such an arrangement, so even though not fully, but at least partially the biological growth is reflected monthly.
The other half are valued once a year for the audit using the total standing forest volume, which is externally surveyed, and the lowest price last 5 years. For the holdings in natural forestry in the Baltic States there is no such equivalent to the fixed rate contract, largely because it is much more predictable with a plantation, so these holdings are just valued once a year.
Does the fund own forest directly?
In Brazil there is an abundancy of land and the fund management does not foresee any significant increase in land prices in the areas where the plantations are. Therefore it makes more sense to lease the land on long term leases, thereby the fund own the actual trees on the land but not the land itself.
In the Baltic States the fund owns land via Baltic Forest AB (publ), a Swedish public company with fully owned local subsidiaries. In the Baltic States the increase in land prices over the last 20 years has been two digit annually, which is why it makes sense to own the land.
How many investors are there and who is the typical investor?
We cannot see exactly how many underlying investors the fund has since many of them are invested via insurance companies or custodian companies. There are however a large number of direct retail investors too from all over the world; Sweden, Norway, South America, Japan and Duabi being the most prominent.
How big is the fund?
Fund size is normally measured as AUM, Asets under Management. The fund has been in a state of AUM growth since 2013 and as per August 2016 has an AUM of approximately 22MEUR. Net AUM growth (after redemptions) is approximately 0.5-1MEUR per month.