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Should You Invest in the Invesco MSCI Global Timber ETF (CUT)?

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Designed to provide broad exposure to the Materials - Timber segment of the equity market, the Invesco MSCI Global Timber ETF (CUT - Free Report) is a passively managed exchange traded fund launched on 11/09/2007.

Retail and institutional investors increasingly turn to passively managed ETFs because they offer low costs, transparency, flexibility, and tax efficiency; these kind of funds are also excellent vehicles for long term investors.

Investor-friendly, sector ETFs provide many options to gain low risk and diversified exposure to a broad group of companies in particular sectors. Materials - Timber is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 14, placing it in bottom 13%.

Index Details

The fund is sponsored by Invesco. It has amassed assets over $205.35 M, making it one of the average sized ETFs attempting to match the performance of the Materials - Timber segment of the equity market. CUT seeks to match the performance of the MSCI ACWI IMI Timber Select Capped Index before fees and expenses.

The MSCI ACWI IMI Timber Select Capped Index reflects the performance of those stocks in the MSCI ACWI Investable Market Indexes that are engaged in the ownership and management of forests and timberlands and production of finished products which use timber as raw material.

Costs

Since cheaper funds tend to produce better results than more expensive funds, assuming all other factors remain equal, it is important for investors to pay attention to an ETF's expense ratio.

Annual operating expenses for this ETF are 0.55%, making it on par with most peer products in the space.

It has a 12-month trailing dividend yield of 1.54%.

Sector Exposure and Top Holdings

While ETFs offer diversified exposure, which minimizes single stock risk, a deep look into a fund's holdings is a valuable exercise. And, most ETFs are very transparent products that disclose their holdings on a daily basis.

Looking at individual holdings, Upm-Kymmene Oyj (UPM) accounts for about 5.07% of total assets, followed by International Paper Co (IP - Free Report) and Amcor Ltd/australia (AMC - Free Report) .

The top 10 holdings account for about 44.09% of total assets under management.

Performance and Risk

The ETF return is roughly 1.69% so far this year and is up about 14.54% in the last one year (as of 08/24/2018). In that past 52-week period, it has traded between $28.58 and $34.52.

The ETF has a beta of 1.07 and standard deviation of 15.90% for the trailing three-year period, making it a medium risk choice in the space. With about 80 holdings, it effectively diversifies company-specific risk.

Bottom Line

To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.


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International Paper Company (IP) - free report >>