Big Money Joins Rush for Carbon, Fueling Bets Prices Will Soar
American investors are joining a rush to buy carbon permits, prompting bets that the cost of pollution may be about to rally further after European prices hit a record high.
Total assets of the KFA Global Carbon ETF*, the biggest exchange-traded fund listed in the U.S. that tracks carbon markets, have surged to almost $60 million from just $3 million six months ago1. Most of the increase has come since U.S. President Joe Biden signaled after his January inauguration that climate change would be a key policy focus.
The fund’s growth is the first hard evidence that U.S. institutional investors are taking interest in a market that used to be the realm of a few hedge funds and the companies required to buy pollution permits. The involvement of big money is showing up in EU carbon prices, which have rallied more than 30% this year to break through $50 for the first time.
*Current name of fund: KraneShares Global Carbon ETF.
1. Data from KraneShares as of 3/19/2021.
For KRBN standard performance and top 10 holdings please click here. Past performance is no guarantee of future results. Diversification does not protect against market risk.