The iShares Global Timber & Forestry (WOOD) exchange-traded fund is a collection of assets that provide investors with diversified exposure to the timber and wood product industry. Sometimes overlooked as a "boring" sector, these companies can provide reliable and consistent earnings to investors even in a market downturn. At the same time, some investors feel the digital economy will have less need for paper and wood products, leading to fears that this is a dying industry.

For those who want to get into the timber sector but do not want to become too dependent on one company. ETFs like WOOD are ideal for this kind of investor. But what does the fund hold?

Currently, iShares has allocated most of WOOD’s holdings into a combination of companies that produce packaging materials, paper products and durable household goods. Yet the fund’s two largest holdings are in none of these industries; they are in real estate investment trusts, or REITs. The largest allocation is to Weyerhaeuser Company (WY), with a 7.9% weight in WOOD’s portfolio. Rayonier Inc. (RYN) closely follows with a 7.6% weight, making up over 15% of the fund’s total assets.

On average, WY and RYN have a 12.4% year-to-date return excluding dividends, which are about 3.8% on average. However, Rayonier cut its dividend in 2015 by 24 cents, which was not fully offset by WY’s two cent dividend increase in the same year.

The fund’s third-largest holding, Packaging Corporation of America (PKG), pays a similar dividend and has had capital gains of 28.9% year-to-date. This stock has a P/E ratio of 17.3, far less than the S&P 500’s P/E ratio of 25, and has a 10-year return of 250%. PKG is a popular value stock thanks to its 14% operating margin, which has remained roughly stable for the last five years, and the company’s focus on lowering shares outstanding, which fell 2.3% in 2015 from the prior year.

The combined performance of these stocks has helped WOOD see a 4.1% year-to-date return on top of 2.2% dividends, although that is significantly less than the S&P 500’s 5.7% return and 2.1% dividend.

WOOD has a 0.47% expense ratio, which is higher than many index funds but lower than many active specialty funds. According to the fund’s fact sheet, the fund has outperformed its benchmark in the last five years with a 2.7% return versus the benchmark’s 2.2% return. However, that is far lower than the S&P 500’s 5-year return of 13.8%.

The fund’s low performance and conservative holdings make it an unlikely choice for aggressive investors, and long-term investors might consider low-cost index funds like Vanguard Total Stock Market ETF (VTI), which has a 0.05% expense ratio and a 5-year performance of 16.3%.

On the other hand, investors who believe timber and forestry are undervalued and poised to rise should consider WOOD as a diversified fund to bet on an improvement in the sector as a whole.