Green Oil Plantations has confirmed it is in talks with two asset management companies to launch a regulated forestry OEIC to retail investors in October.

The company, which already offers two unregulated funds, is planning to launch a forestry fund, which will harness opportunities arising in Australia as part of its government’s drive for 20 per cent renewable energy by 2020.

The fund will generate returns from a variety of methods, through sales of carbon credits in the open market and sales of green oil/biofuel from the trees' pods and seeds

Patricia Ellis, director of Green Oil Plantations, said the decision to launch an OEIC has followed the success of the unregulated funds.

She explained, ‘It is most likely to be an income fund and we are likely to have more information towards the end of July – we appreciate the appeal of a regulated market but we are not only going to sell regulated products.’

Since the beginning of the year, Green Oil has had approval from four self-invested personal pension (SIPPs) providers to allow its unregulated funds into their SIPPs.

Hornbuckle Mitchell, Lifetime Sipp, Brooklands Trustees and most recently, Pointon York have approved the funds as suitable.

There have been a number of fund launches in this sector over the past year, the most recent of which being from Stellar Asset Management.

Stellar launched a second forestry fund (investment trust) at the start of last month.

Jonathan Gain, chief executive officer of Stellar Asset Management, said with yesterday’s rise in capital gains tax, it is the right time to launch a forestry fund.

He explained, ‘The attraction isn’t simply tax relief and the feel good factor, although the 100 per cent inheritance tax, income tax and CGT relief does make forestry an attractive investment for many.

'The outlook for forestry is also immensely appealing at this time. There is considerable demand for uses such as construction, packaging and home improvement and the forests can also provide additional income from communication masts and allowing the constructions of wind farms on the land.

‘Timber is also harvested and distributed to renewable energy power plants, which is a market with substantial capacity for growth.’