The company’s multi-asset fund of funds, Arcturus, is holding Quadris environmental investments, a fund that invests in teak plantations managed by a Brazilian company.
MitonOptimal says the price of hardwoods such as teak has outperformed inflation during the past 100 years. Demand for teak has risen in line with world population growth, which has led to a shortage of supply. This supply problem is a long-term concern as it takes about 25 years for teak trees to grow, so MitonOptimal expects the price of teak to further appreciate.
The teak plantations in which Quadris invests are managed in a sustainable way, with new trees being planted across 3,000 hectares of land each year.
MitonOptimal fund manager Tom McGrath says: “With oil and gold you do not know how much there is in the world and you do not know when someone will find a new source. But we know how much teak there is as satellites can track the amount. Over time you have more teak and the older it gets the more valuable it is.
“The Quadris fund has a long-term track record and it is not stripping Brazilian rain forest. Trees are replanted and Quadris works within the local community.'”For us, it is a good investment – the price of teak is going up on value and it is not correlated to equities.”