Supply Contract and Portfolio Insurance: Applying Financial Engineering to Institutional Timberland Investment

Abstract

The long-term growth of institutional timberland investments depends on the ability of timberland investment management organizations (TIMO) to deal effectively with securitization, leveraging, arbitraging, supply contracting, portfolio insurance, tax efficiency enhancement, and other issues. Financial engineering holds great promise for many of these issues. This study applies financial engineering techniques to two cases–supply contract and portfolio insurance. We believe that the potential benefits of these and other applications can be great.