ESG investing has been the subject of much backlash and controversy in recent months, and Vanguard’s recent resignation from the climate-focused industry alliance to address climate change has added more fuel to the contentious fires. There are a number of climate strategies that are worth consideration, however, that supersede ESG as they seek to capture the real-world transition away from fossil fuels and the investing potential opportunities, such as the KraneShares Global Carbon Transformation ETF (KGHG).
For advisors and investors wanting to capture the valuation potential of equity companies from some of the “dirtiest” industries as they transition to lower emissions practices and business models, the KraneShares Global Carbon Transformation ETF (KGHG) is a fund worthy of consideration and is up 6.13% year-to-date, as of February 21, 2023.
KGHG is currently trading at $25.22 and is above both its 50-day simple moving average (SMA) of $24.79 and its 200-day SMA of $23.79. For trend-followers, KGHG is solidly within “buy” territory and could be well positioned looking ahead as regulatory pressure increases globally on heavily polluting industries.
KGHG seeks to capture the true potential within the carbon transition by focusing on companies from within industries that are traditionally some of the highest emission offenders but are on the precipice of transitioning to renewable technologies.
KraneShares believes that the upside potential of investing in these companies as they transition is enormous. These companies that are set to disrupt their industries would benefit greatly from being leaders in the transition, as the cost of carbon emissions will only become more expensive, cutting into the bottom line as demand decreases for high emissions offenders.
KGHG is an actively managed fund that invests globally across market caps and sectors in carbon emissions reducers that are taking active steps to reduce their carbon footprints and services or the carbon footprints of other companies. This also includes companies within the supply chain of the carbon-reducing companies and companies that are growing their businesses with companies that are materially reducing carbon emissions.
The fund utilizes proprietary, fundamental, bottom-up analysis using information disclosed by companies and third-party data.
KGHG carries an expense ratio of 0.89%.
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