Backed by four decades of global expertise, Manulife Investment Management delivers competitive returns while monetizing ecosystem services through carbon projects, water stewardship, pollinator programs, and mitigation banking. These assets have consistently outperformed on a risk‑adjusted basis (Sharpe ratios: farmland 1.20, timberland 0.86 vs. S&P 500 0.51 and commercial real estate 0.59), underscoring resilience through market cycles. 

Why timberland and farmland now? 

As the global economy transitions in response to climate change and biodiversity loss, timberland and farmland have become essential platforms for climate action and portfolio diversification. They offer enduring fundamentals—steady income, diversification, and inflation protection—while benefiting from new tailwinds such as decarbonization and growing demand for nature-based solutions. Managed effectively, they deliver additional alpha through ecosystem services such as carbon sequestration, water stewardship, and renewable energy integration. 

Performance data underscores their resilience: over the past two decades, farmland and timberland have outperformed traditional asset classes on a risk-adjusted basis, with Sharpe ratios of 1.20 and 0.86, compared to 0.51 for the S&P 500 and 0.59 for commercial real estate (NCREIF Indexes, 2005–2024). Regulatory shifts—including conservation funding, stricter land-use rules, and carbon market development— combined with investor demand for measurable impact, are expanding the investable universe and reinforcing long-term value. 

Non-timber revenue reached 19% of U.S. total revenue, up from 8.6% in 2017. New programs like pine straw raking and biochar production create scalable, long-term income streams, while expanded recreation licensing delivered $2.7M in new revenue. 

Regenerative returns: expanding natural capital value 

While these fundamentals make timberland and farmland compelling, their true potential lies in how they’re managed. At Manulife Investment Management, our integrated stewardship model and Value-Added Services (VAS) platform transform these assets into dynamic systems that generate value beyond traditional production. By monetizing ecosystem services—such as carbon credits, water solutions, pollinator programs, and renewable energy leases—we create new revenue streams while enhancing ecological health and portfolio resilience. The following case studies demonstrate how these strategies deliver measurable impact and scalable outcomes for investors and the environment. 

Natural capital in action 

Case study: scaling timberland for climate impact 

Scale, biodiversity, and carbon strategy can compound returns in timberland. 

Issue 

Institutional investors increasingly seek timberland assets that deliver strong financial returns while advancing climate-positive strategies. Achieving these objectives requires large, diverse tracts that support sustainable production and enhance ecosystem resilience. 

Action 

We acquired and managed extensive timberland holdings with significant hardwood presence to boost biodiversity and productivity. To unlock additional value, we launched three ACR IFM 2.1 carbon projects, projected to generate approximately 6 million removal-based credits over 20 years, positioning clients to benefit from growing voluntary and compliance carbon markets. 

Private credit encompasses a dizzying array of strategies – from well-understood corporate direct lending to more esoteric music royalties, fund financing, litigation finance, and real estate credit. Direct lending remains the center of gravity. For allocators looking to build out large scale private credit portfolios, where to go after direct lending can be a challenge. We believe asset-based finance (“ABF”) is the answer – a truly scalable opportunity that focuses on income generation and capital preservation. 

Private credit has been around for about 5,500 years by our count, and the original credit investments were ABF investments in the form of agricultural financing. But the breakneck growth and associated column inches are a more recent phenomenon. The market as we know it today developed in three stages. 

Private Credit 1.0 

In the 1990s and 2000s, middle market direct lending was generally controlled by the European investment banks and some of the mid-tier US Investment Banks. There were a handful of asset managers (Highbridge, Cerberus, Ares, Golub, and Antares) leading the initial salvos against the banks, but they represented a rounding error within the broader levered credit market. Then came the Global Financial Crisis (the “GFC”) in 2008. 

Read the full ‘Thought Leadership’ article at the link below