New ETF centers on carbon trading futures

New ETF centers on carbon trading futures
The Carbon Strategy ETF, which is listed on NYSE Arca, will hold futures contracts on carbon allowances in emissions trading systems in Europe and North America.
SEP 16, 2022

Another ETF has emerged as an early entrant in the carbon offsets investing market.

On Tuesday, Carbon Fund Advisors announced the launch of its Carbon Strategy ETF. The actively managed product invests in “a portfolio of liquid carbon futures that require ‘physical delivery’ of emission allowances issued under cap and trade regimes,” according to the summary prospectus.

It follows the launch in April of the KraneShares Global Carbon Offset Strategy ETF, which tracks carbon-offset futures contracts.

The new ETF run by Carbon Fund Advisors holds futures contracts on “carbon allowances in emissions trading in Europe and North America.” This includes European Union Allowances, California Carbon Allowances and the Regional Greenhouse Gas Initiative CO2 Allowances, the firm said in its announcement.

“Most investors do not have access to directly buy and sell carbon allowances in these systems, which is limited to those registered in an [emissions trading system],” Carbon Fund Advisors president Tim Collins said in the announcement.

“The Carbon Strategy ETF … opens the door to invest in a portfolio of carbon allowance futures at a time when global carbon prices are forecast to rise as the world aims to achieve the goals of the Paris Agreement.”

The ETF is listed on NYSE Arca and uses the Carbon Streaming BITA Compliance Index as its benchmark. The portfolio managers are Andrew Serowik, Todd Alberico and Gabriel Tan. The ETF has an expense ratio of 75 basis points.

This story was originally published on ESG Clarity.

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