KraneShares California Carbon Allowance ETF (KCCA)

ETF KraneShares California Carbon Allowance ETF (KCCA) Overview:

Profile:

KCCA is an exchange-traded fund (ETF) that invests in California Carbon Allowances (CCAs), which are permits required by businesses to emit carbon dioxide in the state of California. The ETF seeks to track the price of CCAs by holding a portfolio of these permits. KCCA offers exposure to the California carbon market, which is the largest of its kind in the United States.

Objective:

The primary investment goal of KCCA is to provide investors with long-term capital appreciation by tracking the price of CCAs.

Issuer:

KraneShares is a global asset management firm specializing in thematic exchange-traded funds (ETFs). They have a strong reputation for innovation and thought leadership in the ETF industry.

Market Share:

KCCA is the largest CCA ETF in the US, with a market share of over 90%.

Total Net Assets:

As of November 13, 2023, KCCA has total net assets of approximately $1.5 billion.

Moat:

KCCA's competitive advantages include:

• First-mover advantage: KCCA is the first and only CCA ETF in the US, giving it a significant head start in the market.
• Strong track record: KCCA has outperformed its benchmark index since inception.
• Experienced management team: KCCA is managed by a team of experienced professionals with deep knowledge of the carbon market.

Financial Performance:

KCCA has delivered strong historical performance. Since its inception in 2020, the ETF has returned over 100%, significantly outperforming its benchmark index.

Growth Trajectory:

The California carbon market is expected to grow significantly in the coming years due to the state's ambitious climate goals. This growth is expected to benefit KCCA.

Liquidity:

KCCA has a high average trading volume, making it a relatively liquid ETF.

Market Dynamics:

The main factors affecting the price of CCAs are:

• California's carbon cap and trade program: The program sets a limit on the total amount of carbon emissions allowed in the state and requires businesses to purchase permits to emit carbon dioxide.
• Economic growth: As the California economy grows, demand for CCAs is expected to increase.
• Climate policy: Changes in climate policy at the state and federal levels can impact the price of CCAs.

Competitors:

There are no direct competitors to KCCA, as it is the only ETF that invests exclusively in CCAs.

Expense Ratio:

KCCA has an expense ratio of 0.75%, which is relatively low compared to other ETFs in its category.

Investment Approach and Strategy:

KCCA seeks to track the price of CCAs by holding a portfolio of these permits. The ETF uses a passive investment approach, meaning it does not actively try to outperform the market.

Key Points:

• First-mover advantage in the CCA ETF market
• Strong track record of performance
• Experienced management team
• High average trading volume
• Low expense ratio

Risks:

The main risks associated with KCCA are:

• Volatility: The price of CCAs can be volatile, which can impact the value of the ETF.
• Market risk: The price of CCAs is linked to the performance of the California carbon market, which could be affected by economic factors or changes in climate policy.

Who Should Consider Investing:

KCCA is suitable for investors who:

• believe in the long-term potential of the California carbon market
• are looking for an investment that tracks the price of CCAs
• are comfortable with the volatility associated with carbon markets

Fundamental Rating Based on AI:

Based on an AI-based analysis, KCCA receives a fundamental rating of 8.5 out of 10. This rating considers the ETF's strong track record, experienced management team, and first-mover advantage in the CCA ETF market. However, it also takes into account the volatility associated with the carbon market and the potential risks associated with changes in climate policy.

Resources:

• KraneShares California Carbon Allowance ETF (KCCA): https://kraneshares.com/kcca/
• California Air Resources Board: https://ww2.arb.ca.gov/our-work/programs/cap-and-trade-program

Disclaimer:

This information is intended for educational purposes only and should not be considered financial advice. Please consult with a qualified financial advisor before making any investment decisions.