Stellar Asset Management launches Forestry fund

Stellar Asset Management has launched a timber fund offering investors exposure to the UK forestry market.

The First Stellar Forrestry Fund will be operated by Forestry Investment Consultancy [FIC], which currently provides advisory and administrative services to forestry owners.

Stellar said it aims to raise £5 million for the fund and its investment strategy will focus on acquiring a portfolio of UK woodlands which are approximately half way through their life cycle.

The asset management house pointed out the fund will benefit on the back of tax incentives based on the fact that there is no tax on harvested timber.

Stellar also noted that there is no capital gains tax on the growth in value of timber crop and highlighted that forestry investments are eligible for business property relief (BPR) which, in turn, provides relief against inheritance tax within two years .

Jonathan Gain, chief executive officer of Stellar Asset Management, said: ‘Forestry is a low risk asset backed ethical investment. Returns are generated from the timber harvest and the increase in land values in addition to potential income streams from non-forestry activities such as sports or communications masts. In the current economic environment a long term lower risk investment generating returns from physical assets is likely to be attractive to many investors.’

The fund will have a minimum initial investment of £15,000 with multiples of £5,000. It will charge an initial commission of 3% and renewed commission rate of 0.25%. Its investment objective is to outperform the IPD Forestry Index.