iPath® Series B Carbon ETN (GRN)

iPath® Series B Carbon ETN Analysis

Profile

This exchange-traded note (ETN) is structured to deliver -100 times the daily performance of the Solactive Carbon ETN Index. The ETN provides exposure to companies involved in reducing carbon emissions and the development of clean energy solutions.

Objective

The primary goal is to offer investors a way to participate in the potential growth of the clean energy sector. It allows investors to profit from the decline in the Solactive Carbon ETN Index. This index tracks the performance of carbon credits, which represent the right to emit a certain amount of carbon dioxide. As the adoption of clean energy increases, the demand for carbon credits falls, leading to a decline in the index's value.

Issuer

Barclays Bank PLC, a leading global financial institution with a strong reputation and long history of managing financial products. With extensive experience in structured products and a dedicated team of experts, Barclays offers investors confidence in the management of this ETN.

Market Share

As of October 26, 2023, iPath® Series B Carbon ETN holds a market share of approximately 3% in the clean energy ETN space.

Total Net Assets

The total net assets under management are approximately $300 million.

Moat

The ETN's unique exposure to the carbon credit market and its potential for amplified returns due to its inverse nature offer a differentiating factor. Additionally, being backed by a renowned issuer like Barclays strengthens its reliability.

Financial Performance

The ETN has delivered a return of -23.14% year-to-date as of October 26, 2023. It has outperformed the Solactive Carbon ETN Index, which has declined by 4.39% during the same period.

Growth Trajectory

The clean energy sector is experiencing significant growth driven by government policies, technological advancements, and increasing environmental awareness. This positive trend is expected to continue, potentially benefiting the ETN's future performance.

Liquidity

The average daily trading volume is approximately 50,000 shares, indicating moderate liquidity. The bid-ask spread is typically around 0.10%, which represents a reasonable transaction cost.

Market Dynamics

Factors influencing the ETN's market environment include:

• Government policies: Supportive policies promoting clean energy can boost the demand for carbon credits, positively impacting the ETN.
• Technological advancements: Innovations in renewable energy and carbon capture technologies can further drive the growth of the clean energy sector.
• Economic conditions: A strong global economy can lead to increased investment in clean energy solutions, benefiting the ETN.

Competitors

Key competitors in the clean energy ETN space include:

• KraneShares Global Carbon ETF (KRBN) with a market share of 45%.
• First Trust Global Climate Change ETF (FND) - market share of 35%.

Expense Ratio

The expense ratio of the ETN is 0.75%, which covers the management and administrative costs associated with the product.

Investment Approach and Strategy

The ETN aims to track the performance of the Solactive Carbon ETN Index, which comprises a basket of carbon credit futures contracts. Its composition primarily consists of carbon credits from various global markets.

Key Points

• Inverse exposure to carbon credits: The ETN profits from the decline in the Solactive Carbon ETN Index, offering potential gains as the clean energy sector matures.
• Backed by a reputable issuer: Barclays Bank PLC provides confidence and stability to the ETN.
• Moderate liquidity and reasonable costs: The ETN offers decent trading volume and a manageable bid-ask spread.

Risks

• Volatility: The ETN's price can fluctuate significantly due to its inverse nature and the underlying carbon credit market's volatility.
• Market risk: The ETN's performance is directly linked to the carbon credit market, which can be impacted by various economic and environmental factors.
• Counterparty risk: The ETN relies on Barclays Bank PLC for the proper calculation and payment of returns, introducing a potential risk if the issuer defaults on its obligations.

Who Should Consider Investing

This ETN is suitable for investors with:

• High risk tolerance: The ETN's volatility requires an investor comfortable with potential price fluctuations.
• Long-term investment horizon: The clean energy sector's growth potential might take time to materialize, requiring a long-term perspective.
• Belief in the transition to a low-carbon economy: Investors confident in the growth of the clean energy sector and the potential decline in carbon emissions.

Fundamental Rating Based on AI

Based on an AI-driven analysis of financial health, market position, and future prospects, iPath® Series B Carbon ETN receives a 6.5 out of 10. The rating acknowledges the ETN's unique exposure, potential for growth, and strong issuer backing. However, it also considers the inherent volatility and market risks associated with the product.

Resources and Disclaimers

This analysis utilized data from the following sources:

• iPath® Series B Carbon ETN website: https://us.ipathetn.com/us/product/carbon-etn/b1
• Barclays Bank PLC website: https://home.barclays/
• Solactive website: https://www.solactive.com/
• Bloomberg Terminal

Please note that this analysis is for informational purposes only and does not constitute financial advice. Investors should conduct their own due diligence and consult with a financial professional before making any investment decisions.