KraneShares California Carbon Allowance ETF (KCCA)

Overview

The KraneShares California Carbon Allowance ETF (KCCA) is designed to track the performance of a benchmark of California Carbon Allowances (CCAs). It focuses on the cap-and-trade carbon allowance market, offering exposure to the price of carbon credits. Its investment strategy involves investing in futures contracts related to CCAs.

Reputation and Reliability

KraneShares is a well-regarded ETF provider specializing in China-focused and thematic investment strategies. They are known for their expertise in niche markets.

Management Expertise

KraneShares has a dedicated team with expertise in managing commodity and futures-based ETFs, including those focused on environmental and carbon markets.

Goal

To provide investment results that, before fees and expenses, closely correspond to the performance of the IHS Markit Carbon Global Index.

Investment Approach and Strategy

Strategy: The ETF tracks the IHS Markit Carbon Global Index, which measures the performance of a global benchmark for cap-and-trade carbon allowance markets.

Composition The ETF's assets are primarily comprised of futures contracts linked to California Carbon Allowances (CCAs).

Market Share: KCCA holds a significant portion of the market share within ETFs focused on carbon allowances, though the exact percentage fluctuates.

Total Net Assets (AUM): 89570000

Key Competitors

• GRNH
• ICLN
• TAN
• FAN

Competitive Landscape

The competitive landscape involves other ETFs investing in renewable energy or environmental solutions. KCCA's advantage lies in its specific focus on carbon allowance futures, offering direct exposure to carbon pricing. Its disadvantage is its concentrated focus, which may be more volatile than broader clean energy ETFs.

Historical Performance: Historical performance can vary significantly based on carbon market dynamics, providing both growth and volatility.

Benchmark Comparison: The ETF's performance should be compared against the IHS Markit Carbon Global Index to assess tracking efficiency.

Expense Ratio: 0.79

Average Trading Volume

KCCA's average trading volume is moderate, reflecting the niche market it serves.

Bid-Ask Spread

The bid-ask spread varies, but is typically moderate and reflects the liquidity of the underlying futures contracts.

Market Environment Factors

Regulatory changes, carbon pricing policies, and the overall push for decarbonization significantly influence KCCA's performance.

Growth Trajectory

Growth depends on increasing carbon pricing and expanding cap-and-trade programs, although the trajectory can be heavily influenced by policy shifts.

Competitive Edge

KCCA's competitive edge comes from being one of the few ETFs directly targeting the California carbon allowance market. This specialization offers investors a pure-play exposure to carbon pricing dynamics within the California cap-and-trade system. Furthermore, KraneShares' expertise in thematic ETFs focused on China-related and environmental themes provides additional confidence. KCCA provides a targeted means for investors looking for direct impact in the fight against Climate Change.

Volatility

The ETF can be volatile due to fluctuations in carbon prices and regulatory changes.

Market Risk

Specific market risks include regulatory shifts impacting carbon markets, economic factors influencing industrial emissions, and policy changes affecting carbon pricing.

Ideal Investor Profile

The ideal investor is someone seeking exposure to carbon markets as part of a broader ESG or climate-focused investment strategy. It is also suitable for those looking to hedge against potential carbon pricing risks.

Market Risk

KCCA is suitable for investors with a higher risk tolerance seeking long-term growth, rather than passive index followers due to its niche focus and potential volatility.

KraneShares California Carbon Allowance ETF provides a targeted exposure to the California carbon allowance market, tracking the IHS Markit Carbon Global Index. The ETF suits investors seeking to profit from increasing carbon prices and/or offset risk, by investing directly in carbon credit futures. Its financial performance is tied to the price of carbon allowances, which are subject to change. Due to its specialized nature and dependence on regulatory policies, KCCA is more suitable for those with a higher risk tolerance, who must take into consideration its dependency on the California carbon market and associated regulatory climate. While it has a higher expense ratio, it offers a rare investment opportunity.

Data Sources:

• KraneShares website
• ETF.com
• Yahoo Finance
• Bloomberg

Disclaimers:

The data provided is for informational purposes only and should not be considered financial advice. Investment decisions should be based on individual circumstances and after consulting with a qualified financial advisor.