Luke Oliver, head of climate investments at KraneShares, said there’s a new asset class not enough people are talking about. And that asset class is carbon markets.
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And Oliver isn’t not talking about “planting trees and creating offsets.” He’s “talking about the compliance carbon markets, which is an $800 billion dollar industry.”
“Most modern economies have a carbon program,” Oliver told NYSE’s Judy Shaw at Exchange 2024. He cited California, the Northeast of the U.S. the EU, the UK, China, and Australia as regions with such programs.
“These are expanding programs. And essentially, it’s climate regulation,” Oliver said for ETF Leaders, Powered by the New York Stock Exchange. “It’s the most powerful policy tool for reducing pollution.”
Oliver added: “This is happening. It’s not a maybe or an if.”
And the KraneShares executive noted that investors can be long carbon markets. So, by being long, investors have something that doesn’t correlate and has a positive expected upside.
KraneShares has a few options for targeting this asset class. The KraneShares Global Carbon Strategy ETF (KRBN) is the issuer’s global portfolio of carbon credits. The firm also has a California-only fund, the KraneShares California Carbon Allowance Strategy ETF (KCCA), “for those that are a little more American-centric,” Oliver said. KraneShares also has a European-only product, the KraneShares European Carbon Allowance Strategy ETF (KEUA), “for those looking at the largest, most liquid market.”
But ultimately, Oliver feels “like a blended portfolio of both is the way to go.” Which is why KraneShares created KRBN.
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