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The IPD UK Forestry index returned 31.6 per cent in the 2007 calender year, while the FTSE UK All-Share generated 5.3 per cent and the FTSE 5-15yr Gilts index returned 6.4 per cent, the firm said.

Commercial property, as recorded by IPD's 2007 UK Property index, meanwhile fell 3.4 per cent over the year.

Alastair Sandels, managing director of UK Forestry at Fountains, one of the sponsors of the index, said timber prices, which had been underpinned by the emerging wood energy sector, had supported the asset's capital growth over the last 12 months, "despite the uncertainty caused by rising energy costs and a reduction in housing starts".

"Wood is a sustainable green product and in the long-term demand will outstrip supply," he added.

IPD also stressed over a 15-year horizon, timber had in fact underperformed the other three asset classes. However, it claimed it was significantly less volatile, which made it attractive for diversification.