There was a story on the BBC website last week about a couple who invested their pension fund in a firm producing truffle trees. Not surprisingly, the story didn’t end happily.
It reminded me of a similar incident involving the equally exotic Quadris Environmental Forestry Fund.
This fund, which was launched in 2001, had more than GBP100 million from 1,200 people invested in the teak plantations in Brazil, managed by a company called Floresteca.
I remember this one well, as it was being heavily promoted by an advisory firm here in Poland. Unfortunately it had a similarly disastrous ending for investors.
Last I heard, the adviser in question still couldn’t figure out why stuffing GBP7 million of his clients’ money into a fund investing in the Brazilian rain forest was a bad idea.
Moral of the story? Make sure your pension is invested across a well diversified portfolio of low cost index funds and leave the study of trees to dendrologists.