OP-Forest Owner is a non-UCITS fund seeking long-term value appreciation by investing directly in forest estates located mainly in Finland but also in those located elsewhere in the European Economic Area.
Forest estates are purchased on open markets from institutions, private forest owners and the government especially in the Finnish regions of Northern Karelia, Northern Savonia, Northern Ostrobothnia, Kainuu and Lapland. The fund may also hold stocks of an unlisted company focusing directly on forest ownership, interests in a jointly owned forest unit or corresponding investment instruments directly related to forest ownership. In addition, the fund may invest in fixed-income securities for the purpose of cash management and temporary asset investments. In order to hedge against market changes, to replace direct investments and to otherwise promote efficient portfolio management, the fund may also invest in derivative contracts and OTC derivatives.
OP-Forest Owner protects its forest property through forest insurance. Key risks with respect to the fund’s value performance are associated with developments in the forest estate markets and in timber value. The fund's earnings may be substantially affected by costs arising from maintaining, owning and trading estates and from expert services used in buying and selling estates, which will be paid using the fund’s assets.
In addition, due to the leverage used by the fund, a rise in interest rates or borrowing costs may reduce the fund’s return. The investor should also note that the fund units are subject to liquidity risk or, in other words, a risk of failing to encash the fund’s investments within the intended time frame and at the desired price. For this reason, execution of redemption orders may in some cases take longer than usual.
The fund realises its earnings on the timber and forest estate markets and annually distributes at least 75% of its net earnings to the holders of fund units. The fund is tax free, but the share of earnings is considered unearned income for the investor.