About The World Carbon Fund
The World Carbon Fund invests in the most liquid, regulated carbon markets or Emission Trading Systems (ETS) worldwide.
The Fund’s objectives are to generate absolute returns with a low correlation to other asset classes and to have a direct impact on climate change.
Get in touch today to learn more about emissions trading.
Emissions Trading Explained
There are many benefits to putting a price on carbon. Download the document below which addresses many common questions asked about carbon trading.
CFA Institute Case Study
In September 2020, the CFA Institute published our case study “Carbon as an Emerging Asset Class” which is an extract from our full research paper. Access the full case study at the link below.
Journal of Alternative Investments
In June 2022, The Journal of Alternative Investments published our paper titled the Carbon Risk Premium. Access the full research paper at the link below.
World Carbon Fund
Investment Thesis and Climate Impact
The World Carbon Fund is managed by London-based Carbon Cap Management LLP, which has built an expert team across carbon pricing, carbon trading and fundamental carbon markets research led by the CIO and founder, Michael Azlen.
The Fund invests across multiple liquid and regulated carbon markets and has the dual objectives to generate absolute returns with a low correlation to traditional asset classes and to have a direct impact on climate change. The Fund deploys capital across two complementary strategies within a clearly defined risk framework: Core Strategy and Alpha Strategies. The Core Strategy seeks to generate returns from long-biased tactical allocations across five carbon markets combined with an options overlay. The Alpha Strategies seek to generate returns from arbitrage, relative value and other short term trading strategies.
The World Carbon Fund is registered as an “Article 9” fund under the EU’s Sustainable Finance Disclosure Regulation (SFDR), confirming our commitment to sustainable investment. It seeks, through its investment activities, to contribute directly to the reduction in global CO2 emissions. In addition, 20% of the performance fees are committed to the purchase and permanent cancellation of carbon allowance permits.
- If climate change is to be tackled and Paris Agreement targets met, then the price put on carbon emissions needs to rise substantially over the next 5-10 years with many forecasting a price of $120/tonne vs c.$60 today.
- Carbon Cap has completed ground-breaking research into carbon as an asset class with a full research paper published in the Journal of Alternative Investments and a CFA Case Study.
- The research highlights the strong returns generated from global carbon markets and the fact that carbon has exhibited very low correlation to traditional and alternative asset classes.
- Carbon markets are highly regulated and very liquid, but remain dominated by end users which provides considerable opportunities for alpha generation.
- These markets can exhibit volatility and this provides additional opportunities to add value in respect of risk management as well as implementing strategies that can benefit from this volatility.
- Carbon has proven to be an excellent hedge for inflation as higher carbon costs are “passed through” to consumers. Academic research confirms this and in the current macro environment, inflationary hedges are attractive.
- An allocation to the World Carbon Fund can add significant value as a diversifier to investor portfolios given its uncorrelated return generation and can significantly reduce the “carbon footprint” of a diversified portfolio and may provide a “climate hedge” against climate risks in equity and bond portfolios.
To find out more, please contact us