One-tenth of Harvard University's endowment portfolio consists of timberland.

The Harvard University endowment fund suffered a loss of $10 billion in 2009. Unable to dump toxic investments, the university was left with the challenge of finding new ways to recoup this 27 percent portfolio loss. An important component of the solution to the challenge is the investment in timber in Brazil.

The Harvard University endowment fund doesn’t just invest in timber; fund staffers actively manage the investments. Jane Mendillo, the Harvard Management CEO, head of Harvard University’s $32 billion endowment managed tree plantations and inspected Harvard’s holdings in Brazil. According to Business Newsweek, the pine and eucalyptus trees planted in neat rows that stretch for miles will be used to make charcoal, feed pulp mills and, Mendillo hopes, produce an increasing supply of saw logs for furniture and other consumer goods for a burgeoning Brazilian middle class.”

Mendillo’s hard work seems to be paying off as the fund experienced a 12.9 percent 20-year rate-of-return as of 2011. This includes a 19 percent increase in natural resources investments in 2011 alone. It seems that investment in timber is able to help recover Havard’s financial loss in 2009.

Image courtesy of D H Wright on Flickr

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