Actively managed ETF will hold futures
contracts on carbon allowances in emissions trading systems in
Europe and North America
Carbon Fund Advisors Inc. (“Carbon Fund Advisors”) is pleased to
announce the launch of the Carbon Strategy ETF (NYSE: KARB), an
actively managed thematic ETF that will provide investors with
exposure to the global compliance carbon markets, which have grown
from 186 billion euros ($220 billion) in 2018 to 760 billion euros
($899 billion) in 2021 according to Refinitiv.
“There is a growing global push to regulate and reduce
greenhouse gas emissions in an effort to combat climate change, and
emissions trading systems can be an effective tool for governments
across the globe to achieve their climate goals,” said Tim Collins,
a founder and President of Carbon Fund Advisors.
The compliance carbon markets are comprised of emissions trading
systems (“ETS”) established by regional, national or subnational
jurisdictions to put an explicit price on greenhouse gas (“GHG”)
emissions. A cap is set on the total annual GHG emissions to be
generated by companies in regulated industries. The cap, or
permitted emissions, declines annually to achieve the climate goals
of the jurisdiction(s). Carbon allowances equal to the emissions
cap may then either be freely allocated and/or auctioned to
emitting companies by the governing entity. Companies within an ETS
may buy or sell carbon allowances based on need (i.e., a company
with lower emissions may choose to sell allocated carbon allowances
to an entity with higher emissions). Emitters with an insufficient
amount of allowances to offset their emissions at the end of the
reporting period incur penalties.
“Most investors do not have access to directly buy and sell
carbon allowances in these systems, which is limited to those
registered in an ETS,” continued Tim Collins. “While active futures
markets can provide investors with exposure to certain compliance
carbon markets, investing directly in carbon allowance futures
contracts can be challenging because of the difficulties associated
with gaining access to derivative markets. The Carbon Strategy ETF
is a potential solution for that issue because it opens the door to
invest in a portfolio of carbon allowance futures at a time when
global carbon prices are forecast to rise as the world aims to
achieve the goals of the Paris Agreement.”
The fund uses the Carbon Streaming BITA Compliance Index (the
“Index”) as a reference index, which tracks the performance of the
compliance carbon markets through an allocation into a series of
carbon allowance futures contracts. The Carbon Strategy ETF will
initially hold futures contracts for carbon allowances in some of
the most heavily traded carbon markets, located in Europe and North
America, including European Union Allowances (EUA), California
Carbon Allowances (CCA), and the Regional Greenhouse Gas Initiative
(RGGI) CO2 Allowances.
(2018: $1 = 0.847 euros and 2021: $1 = 0.845 euros)
About Carbon Fund Advisors Inc.
Carbon Fund Advisors Inc. was founded by individuals with
decades of experience in capital markets to provide investors with
exposure to the global carbon markets. The team is comprised of
professionals with a diverse set of skills and experiences across
asset classes and industries. To learn more, please visit
karbetf.com.
About Carbon Streaming Corporation
Carbon Streaming Corporation (NEO: NETZ) (OTCQB:
OFSTF) (FSE: M2Q), an ESG principled company, offers
investors exposure to carbon credits, and holds a 50% equity
interest in Carbon Fund Advisors Inc.
Disclosures
Carefully consider the Fund’s investment objectives, risk
factors, charges and expenses before investing. This and additional
information can be found in the Fund’s full and summary prospectus,
which may be obtained by visiting
http://karbetf.com/investor-materials. Read the prospectus
carefully before investing.
The investments held in the Fund’s portfolio may experience
sudden, unpredictable drops in value or long periods of decline in
value. Cap and Trade Risk. There is no assurance that cap
and trade programs will continue to exist. Cap and trade may not
prove to be an effective method of reducing greenhouse gas
emissions. As a result, or due to other factors, cap and trade
programs may be terminated or may not be renewed upon their
expiration. Investment Capacity Risk. If the Fund’s ability
to obtain exposure to carbon credit futures contracts, which are
commodity futures contracts linked to the value of emission
allowances (“Carbon Futures”), consistent with its investment
objective is disrupted for any reason including, limited liquidity
in the Carbon Futures market, a disruption to the Carbon Futures,
or as a result of margin requirements or position limits imposed by
the Fund’s FCMs, the CME, or the CFTC, the Fund would not be able
to achieve its investment objective and may experience significant
losses.
Distributor: Quasar Distributors, LLC.
The Carbon Streaming BITA Compliance Index is jointly owned by
Carbon Fund Advisors Inc. and BITA GmbH, and is calculated,
administered, and disseminated by BITA GmbH.
While the Carbon Strategy ETF utilizes the Carbon Streaming BITA
Compliance Index (the “Index”) as a reference index, it is an
actively managed fund and is under no obligation to follow the
rules of the Index or invest in the underlying holdings of the
Index and may not track the performance of the Index.
An emissions trading system, sometimes referred to as a
cap-and-trade program, is a regulatory program designed to limit,
or cap, the total level of emissions of greenhouse gases,
particularly carbon dioxide, by companies in regulated industries,
such as manufacturers or energy producers. The regulator, such as a
governmental entity or supranational organization, allocates and/or
auctions a limited number of annual emission allowances that allow
companies to emit a certain amount of greenhouse gases. Companies
are then penalized if they are unable to offset their emissions
with enough emission allowances. If a company reduces its emissions
levels, it can sell, or “trade,” unused emission allowances to
other companies on the open market. Over time, regulators lower the
number of emission allowances available each year, thereby lowering
the total cap on emissions, making emission allowances more
expensive, thereby incentivizing regulated entities to reduce their
emissions.
The Fund expects to gain Carbon Futures exposure by investing in
a wholly owned and controlled subsidiary of the Fund organized
under the laws of the Cayman Islands (the “Subsidiary”). The
Subsidiary is not registered under the 1940 Act, and, unless
otherwise noted in the prospectus, is not subject to all the
investor protections of the 1940 Act.
The Fund’s investment exposure to futures instruments will cause
it to be deemed to be a commodity pool, thereby subjecting the Fund
to regulation under the CEA and CFTC rules. Registration as a CPO
imposes additional compliance obligations on the Advisor and the
Fund related to additional laws, regulations, and enforcement
policies, which could increase compliance costs and may affect the
operations and financial performance of the Fund.
Shares are to be bought and sold in the secondary market at
market prices. Although it is expected that the market price of
Shares will approximate the Fund’s NAV, there may be times when the
market price of Shares is more than the NAV intra-day (premium) or
less than the NAV intra-day (discount) due to supply and demand of
Shares or during periods of market volatility.
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Media: Sarah Griffin Kane & Hook Communications T:
617.285.0432 E: sarah@kaneandhook.com
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