KraneShares Global Carbon ETF (KRBN)

Overview

The KraneShares Global Carbon ETF (KRBN) tracks the performance of a global basket of carbon credit futures, providing exposure to the cap-and-trade carbon allowance markets. It focuses on carbon allowances, enabling investors to participate in the pricing of carbon emissions.

Reputation and Reliability

Krane Funds Advisors is a reputable ETF provider known for its focus on China and thematic investing, with a generally reliable track record.

Management Expertise

Krane Funds Advisors has a specialized team with expertise in thematic investing, including carbon markets and sustainability-focused strategies.

Goal

The primary investment goal of KRBN is to track the performance of a global basket of carbon credit futures contracts.

Investment Approach and Strategy

Strategy: KRBN aims to replicate the performance of the IHS Markit Global Carbon Index, which tracks carbon allowance futures contracts.

Composition The ETF primarily holds carbon allowance futures contracts from various cap-and-trade programs, including European Union Allowances (EUA), California Carbon Allowances (CCA), and RGGI Allowances.

Market Share: KRBN holds a significant market share as one of the largest ETFs in the carbon allowance futures space.

Total Net Assets (AUM): 1470000000

Key Competitors

• iPath Series B Carbon ETN (GRN)

Competitive Landscape

The competitive landscape is relatively concentrated, with KRBN holding a dominant position. GRN is the main competitor, structured as an ETN. KRBN's primary advantage is its larger AUM and greater liquidity, while GRN, being an ETN, carries credit risk of the issuer. Overall, the market share between competitors is heavily skewed towards KRBN.

Historical Performance: Historical performance varies with carbon market dynamics, influenced by policy changes and economic conditions.

Benchmark Comparison: KRBN aims to closely track its benchmark, the IHS Markit Global Carbon Index. Performance deviations are generally due to tracking error and fund expenses.

Expense Ratio: 0.78

Average Trading Volume

KRBN exhibits strong liquidity with a substantial average daily trading volume.

Bid-Ask Spread

The bid-ask spread for KRBN is generally tight, reflecting its high trading volume and liquidity.

Market Environment Factors

Economic growth, climate policy changes, and regulatory developments in cap-and-trade programs significantly impact KRBN's performance.

Growth Trajectory

KRBN's growth trajectory is tied to the expansion of carbon markets and increasing investor interest in carbon pricing as a climate change mitigation tool. Recent increases in global carbon prices have driven growth.

Competitive Edge

KRBN benefits from being one of the first and largest ETFs providing exposure to the global carbon allowance market. This first-mover advantage contributes to its liquidity and trading volume, making it attractive to institutional investors. Its focus on carbon allowances provides a targeted and direct exposure to carbon pricing mechanisms, differentiating it from broader ESG or clean energy ETFs. The ETF's size and AUM create a network effect, attracting more investors and further enhancing its liquidity.

Volatility

KRBN's volatility can be high due to the speculative nature of carbon markets and regulatory uncertainty.

Market Risk

Market risk includes regulatory changes, policy shifts, and fluctuations in the demand for carbon credits, which can significantly impact carbon allowance prices. Exposure to futures contracts can amplify these risks.

Ideal Investor Profile

The ideal investor is someone seeking exposure to carbon markets as part of a broader ESG or climate-focused investment strategy.

Market Risk

KRBN is more suitable for informed investors who understand carbon allowance markets and are comfortable with potential volatility and regulatory risks.

KraneShares Global Carbon ETF (KRBN) provides investors with targeted exposure to global carbon allowance futures. Its performance is closely linked to policy changes and economic conditions within cap-and-trade programs. While it offers a unique investment opportunity, investors should be aware of the potential volatility and regulatory risks associated with carbon markets. It is best suited for informed investors with a long-term view on carbon pricing. It faces primary competition from iPath Series B Carbon ETN (GRN).

• GRN
• ICLN
• TAN
• QCLN

Data Sources:

• KraneShares
• IHS Markit
• Morningstar
• Bloomberg

Disclaimers:

The data and analysis provided are for informational purposes only and should not be considered investment advice. Past performance is not indicative of future results. Investing in ETFs involves risk, including the potential loss of principal.