Back to top

Image: Bigstock

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

Read MoreHide Full Article

Looking for broad exposure to the Materials - Timber segment of the equity market? You should consider the Invesco MSCI Global Timber ETF (CUT), a passively managed exchange traded fund launched on 11/09/2007.

An increasingly popular option among retail and institutional investors, passively managed ETFs offer low costs, transparency, flexibility, and tax efficiency; they are also excellent vehicles for long term investors.

Additionally, sector ETFs offer convenient ways 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 15, placing it in bottom 6%.

Index Details

The fund is sponsored by Invesco. It has amassed assets over $206.70 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 1.52%.

Sector Exposure and Top Holdings

Even though ETFs offer diversified exposure which minimizes single stock risk, it is still important to look into a fund's holdings before investing. Luckily, 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 5.14% of total assets, followed by Westrock Co (WRK) and International Paper Co (IP - Free Report) .

The top 10 holdings account for about 44.06% of total assets under management.

Performance and Risk

The ETF has gained about 3.17% and was up about 11.55% so far this year and in the past one year (as of 09/17/2018), respectively. CUT has traded between $29.96 and $34.52 during this last 52-week period.

The ETF has a beta of 1.06 and standard deviation of 15.55% 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.


In-Depth Zacks Research for the Tickers Above


Normally $25 each - click below to receive one report FREE:


International Paper Company (IP) - free report >>