KraneShares Global Carbon ETF (KRBN)KRBN

ETF Analysis: KraneShares Global Carbon ETF (KRBN)

Profile:

KRBN is an ETF that invests primarily in global carbon credit futures contracts. This means it tracks the price of carbon credits, which are permits that allow companies to emit a certain amount of carbon dioxide.

Objective:

The ETF's primary goal is to provide investors with exposure to the global carbon market and to benefit from the potential increase in the price of carbon credits as governments and corporations increasingly focus on reducing their carbon footprints.

Issuer:

KraneShares is a New York-based asset manager specializing in China-focused and thematic ETFs. They have a good reputation in the industry with over $16 billion in assets under management.

Market Share:

KRBN is the largest ETF in the carbon credit space, with approximately 70% market share.

Total Net Assets:

As of November 2023, KRBN has over $1 billion in assets under management.

Moat:

KRBN has a strong moat due to its first-mover advantage in the carbon credit ETF space and its access to institutional investors. The ETF also benefits from a lack of direct competition, as there are only a few other carbon credit ETFs available.

Financial Performance:

KRBN has outperformed the S&P 500 in 2022 and 2023, returning over 30% in both years. However, it's important to note that the carbon credit market is relatively young and volatile, and past performance may not be indicative of future results.

Benchmark Comparison:

KRBN has outperformed its benchmark, the IHS Markit Global Carbon Index, over the past year.

Growth Trajectory:

The global carbon market is expected to grow significantly in the coming years, driven by government regulations and corporate commitments to net-zero emissions. This growth trajectory bodes well for KRBN's future prospects.

Liquidity:

KRBN has an average daily trading volume of over 1 million shares, making it a relatively liquid ETF.

Bid-Ask Spread:

The bid-ask spread for KRBN is around 0.5%, which is relatively tight for an ETF in this space.

Market Dynamics:

The carbon credit market is influenced by several factors, including government policies, emissions reduction goals, and technological advancements. The increasing adoption of carbon pricing mechanisms and growing demand from corporations to offset their emissions are expected to positively impact the market.

Competitors:

Key competitors to KRBN include the Invesco Carbon Credits ETF (CRBN) and the iShares Global Carbon Allowance ETF (GRN). These ETFs have similar investment objectives but may differ in their underlying holdings and fees.

Expense Ratio:

The expense ratio for KRBN is 0.79%.

Investment Approach and Strategy:

KRBN tracks the IHS Markit Global Carbon Index, which includes futures contracts on various carbon credit markets worldwide. The ETF invests directly in these futures contracts, aiming to provide investors with exposure to the overall carbon credit market.

Key Points:

• First-mover advantage in the carbon credit ETF space.
• Strong track record of outperformance.
• High growth potential in the carbon credit market.
• Relatively liquid and low-cost.

Risks:

• Volatility of the carbon credit market.
• Regulatory uncertainty surrounding carbon pricing mechanisms.
• Lack of historical data on the carbon credit market.

Who Should Consider Investing:

• Investors looking for exposure to the global carbon market.
• Investors with a long-term investment horizon.
• Investors comfortable with a moderate level of risk.

Fundamental Rating Based on AI:

(6/10)

KRBN has a solid fundamental rating, driven by its first-mover advantage, strong track record, and high growth potential. However, the ETF faces volatility risks and regulatory uncertainties that investors should be aware of.

Resources and Disclaimers:

This analysis used information from the KraneShares website, ETF.com, and Bloomberg Terminal. This information is provided for informational purposes only and should not be considered investment advice.