KraneShares Global Carbon ETF (KRBN)

Overview

The KraneShares Global Carbon ETF (KRBN) tracks the IHS Markit Global Carbon Index, providing exposure to cap-and-trade carbon allowance futures contracts. It focuses on the global carbon credit market, allowing investors to participate in carbon pricing mechanisms aimed at reducing greenhouse gas emissions. The ETF aims to mirror the performance of the carbon credit market, primarily in the EU, California, and RGGI.

Reputation and Reliability

KraneShares is known for its thematic ETFs, particularly those focused on China and innovative investment strategies. The issuer has a good reputation for providing specialized access to niche markets, including carbon allowances.

Management Expertise

The management team has experience in creating and managing specialized ETFs, including commodity and environmental-focused funds.

Goal

The primary investment goal of KRBN is to provide investment results that, before fees and expenses, correspond generally to the price and yield performance of the IHS Markit Global Carbon Index.

Investment Approach and Strategy

Strategy: KRBN aims to track the IHS Markit Global Carbon Index, a benchmark designed to track the performance of a basket of carbon emission allowances.

Composition The ETF primarily holds futures contracts of carbon emission allowances, including European Union Allowances (EUA), California Carbon Allowances (CCA), and Regional Greenhouse Gas Initiative (RGGI) allowances.

Market Share: KRBN holds a significant market share within the carbon credit ETF space.

Total Net Assets (AUM): 1600000000

Key Competitors

• iPath Series B Carbon ETN (GRN)
• WisdomTree Carbon Offsetters ETF (WSO)

Competitive Landscape

KRBN dominates the carbon credit ETF market due to its first-mover advantage and higher AUM. GRN offers exposure through an ETN structure, which involves credit risk. WSO focus on carbon offset projects which are quite different than carbon allowance futures. KRBN benefits from higher liquidity and trading volume compared to its competitors.

Historical Performance: Historical performance data varies with carbon market fluctuations; significant growth occurred during periods of increased regulatory pressure and carbon pricing. Consult current financial resources for specific historical return data.

Benchmark Comparison: KRBN's performance closely tracks the IHS Markit Global Carbon Index, with slight deviations due to fees and tracking error. Consult current financial resources for specific comparison data.

Expense Ratio: 0.78

Average Trading Volume

KRBN demonstrates strong liquidity with a high average daily trading volume, facilitating easy entry and exit for investors.

Bid-Ask Spread

The bid-ask spread for KRBN is generally tight, indicating efficient trading and lower transaction costs.

Market Environment Factors

KRBN is affected by government regulations related to carbon emissions, economic growth in regions with cap-and-trade programs, and global efforts to combat climate change.

Growth Trajectory

KRBN's growth trajectory is tied to the expansion and tightening of global carbon markets and increasing investor interest in ESG and climate-related investments.

Competitive Edge

KRBN's competitive advantage stems from being the first and largest ETF providing direct exposure to the global carbon credit market. This first-mover advantage has allowed KRBN to amass significant AUM and establish strong liquidity. The ETF benefits from the increasing demand for carbon credits as governments and corporations aim to meet emission reduction targets. KRBN's focus on liquid futures contracts provides transparency and efficiency compared to other carbon-related investments.

Volatility

KRBN's volatility can be high due to the fluctuating nature of carbon prices and regulatory changes. The historical Beta is approximately 1.39.

Market Risk

KRBN is exposed to market risk related to changes in government regulations, economic conditions, and investor sentiment towards carbon pricing mechanisms.

Ideal Investor Profile

The ideal investor for KRBN is someone seeking to diversify their portfolio with exposure to carbon markets, believes in carbon pricing as a climate solution, and is comfortable with potential volatility.

Market Risk

KRBN is suitable for investors with a medium to long-term investment horizon who understand the risks and opportunities associated with carbon markets. It may be used by active traders looking to capitalize on short-term price movements or by long-term investors seeking exposure to a growing asset class.

KraneShares Global Carbon ETF (KRBN) offers investors direct exposure to the global carbon credit market through futures contracts. As the first and largest ETF in this space, it provides high liquidity and is influenced by carbon emissions regulations and global climate change efforts. The ETF's performance is linked to carbon pricing mechanisms and regulatory stringency, making it suitable for investors seeking to participate in environmental markets. While the carbon allowance market can be volatile, KRBN has emerged as a key player for those looking to invest in initiatives against climate change. Investors should be aware of the market risk and the potential impact of regulatory changes on carbon prices when considering an investment in KRBN.

Data Sources:

• KraneShares
• IHS Markit
• Morningstar
• Bloomberg

Disclaimers:

The data and analysis provided are for informational purposes only and should not be considered investment advice. Investment decisions should be based on individual circumstances and consultation with a qualified financial advisor.