Timber REITs, Like Weyerhaeuser, Could Get Boost from Vanguard ETF Swap Vanguard is asking shareholders of its REIT ETF to switch to an index that includes timber companies. By Amey Stone July 25, 2017 10:54 a.m. ET Michael Underhill, chief investment officer of Capital Innovations, has long been a fan of timber real estate investment trusts. He sees these companies, which own forest land, benefitting from higher lumber prices, growing demand due to housing market growth and shrinking supply due to wildfires and damage from the mountain pine beetle. In mid-July, there emerged a new reason to like the asset class. Vanguard is asking shareholders to swap the index it uses for its $35 billion real estate exchange-traded fund, Vanguard REIT ETF (VNQ) (plus a $1 billion insurance-related real estate sector fund) to a different index that includes timber REITs. Vanguard's goal is to broaden the fund's mandate and bring it more in sync with other sector funds that use related indices. Hundreds of millions in capital could flow into timber REITs with that change, says Underhill. A REIT that could benefit the most is Weyerhaeuser (WY). That one company makes up 80% of the timber allocation, which makes up 3% of the new index, points out Goldman Sachs analyst Brian Maguire in a note published last Friday. "While still pending shareholder review, we view both of these proposals as possible positive catalysts for WY shares, and we reiterate our Buy rating," writes Maguire. Timber REITs are among the top holdings in a fund Underhill subadvises, Oak Ridge Global Resources and Infrastructure (INNAX). Plus, he has a separate listed fund just for timber investments. "You get some income, inflation protection and it's an alternative asset class that's not correlated to common stocks," he tells Barron's. Underhill also owns Plum Creek Timber (PCL), Rayonier (RYN), and Potlatch (PCH). http://www.barrons.com/articles/tim...d-get-boost-from-vanguard-etf-swap-1500994456