CNIC Funds and Tidal Financial Services have launched a carbon neutral commodities ETF to combat the effects of stubborn inflation on portfolios.
The CNIC ICE U.S. Carbon Neutral Power Futures Index ETF (AMPD) leverages an electricity futures contract methodology to track the broad U.S. electricity market on a carbon neutral basis. Listed on the NYSE on May 19, AMPD is the first commodity-based carbon neutral ETF that seeks to provide inflation mitigation and portfolio diversification, according to a statement from the firm.
“Electricity is one of the most consumed commodities in the U.S.. Until now, there has not been an ETF providing exposure,” Todd Rosenbluth, head of research at VettaFi, said. “It continues to impress me how innovative asset managers can be.”
Under the Hood of AMPD
AMPD is based on U.S. electricity and carbon allowance futures contracts. The fund tracks the performance of the ICE U.S. Carbon Neutral Power Index (ICECNPIT).
According to the firm, ICECNPIT combines the next 12 months of electricity futures contracts from the six major U.S. power pools (ISOs) deemed to be broadly representative of electricity consumption in the U.S.. Additionally, ICECNPIT includes sufficient carbon allowance futures contracts. The carbon allowances are to offset the carbon emissions from the electricity generation associated with the electricity futures.
Individual power regions in the index are weighted based on the average annual load measured in megawatt hours reported by each ISO.
ICECNPIT’s methodology aims to provide sustainable returns while minimizing the U.S. power market’s seasonality and volatility.
Qiao Duan and Charles Ragauss, portfolio managers for fund advisor Toroso Investments, manage the fund. AMPD is sponsored by CNIC, an investment platform for carbon neutral commodity investment products, according to the firm’s website.
AMPD charges a 95 basis point expense ratio.
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