If you can't see the wood for the trees when it comes to examining a Forestry Fund prospectus, you are not alone. An expert within the Irish forestry industry has expressed concern that consumers may not have sufficient information for them to make well-informed investment decisions.

Two recently-opened forestry funds, The Premier Irish Forestry Fund and The Sixth Irish Forestry Fund, are quoting projected compound annual growth rates of 12.58 per cent and 12.25 per cent. After being adjusted for inflation, the companies project a real return rate of 8.58 and 7.75 per cent respectively.

Forestry expert and independent industry consultant Mr Henry Phillips believes these rates may be optimistic. "Based on what has been achieved by forestry funds in Ireland and the UK it looks high. You're usually looking at 4 to 7 per cent per annum," he said.

Mr Phillips says it is difficult to know what the forestry funds' projections are based on as the financial risks are not clearly stated in the prospectus.

"Returns are sensitive to land and timber prices. The prospectuses don't state timber prices long term, they state the current price. Timber prices can fluctuate 24 per cent a year, they're very cyclical. For an analysis you should get an average price based on the previous 10 to 15 years," he said.

The two forestry funds have identified a number of risks: fire, frost, wind, disease, regulatory mechanisms and planning in their prospectuses, he says. "But there are more risks, particularly in relation to the markets. It's naive to assume that there'll be an excellent market for timber in 30 years time."

Mr Phillips is also concerned about the stated rotation length of 30 years in the prospectuses. "The optimum rotation length is usually longer than 30, usually 35 to 45 years depending on the productivity of the soil," he said.

The Sixth Irish Forestry Fund is offering 3,000 preference shares at £500 each. "A once off investment of £500 per share should result in a distribution in excess of £16,000 tax free per share when the crop is harvested in approximately 30 years time," says the documentation. Investment closes on September 30th.

The Premier Irish Forestry Fund hopes to place 4,000 preference shares at £1,000 each. Based on certain assumptions, the projected return is "£35,009 tax free after a 30-year period". Investors must apply before September 17th.

Both funds state that their illustrative financial returns are not a prediction or forecast and actual returns may be more or less than those shown.

Both forestry funds stand by their projections.

Sixth Irish Forestry Fund's marketing director, Mr Paul Brosnan, says they hired the top forestry experts in the State to determine the pricing structure and risks in relation to the return.

The fund is also buying mature forests and top-quality forestry land for planting. "Our aim is to ensure that we buy premium quality land so we achieve the projected returns," says Mr Brosnan.

The Premier Irish Forestry Fund's director, Mr Paul Bowes, says they are basing projections on a realistic long-term view of the market. "We're looking at what's happened in Ireland over the past 30 years," he said.