The World Carbon Fund invests globally into the most liquid, regulated carbon markets or Emission Trading Systems (ETS). The fund objectives are to generate absolute returns with a low correlation plus a direct impact on climate change.
World Carbon Fund Investment Thesis & Climate Impact
If climate change is to be tackled and Paris Agreement targets met, then the price levied on carbon emissions needs to rise substantially over the next 5-10 years with many forecasting a price of $60-100/tonne compared to c.$20 today.
- Carbon Cap has completed ground breaking research into carbon as an asset class with an academic paper, an extract of this has been published by the CFA and can be found here https://www.cfainstitute.org/-/media/documents/art... .
- 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 and we expect this to continue.
- Compliance carbon markets are highly regulated and very liquid, trading more than $250 billion in 2019 but remain dominated by industrials and other
compliance entities, seeking to manage their carbon exposures. This provides considerable alpha generation opportunity for financial investors.
- These markets have proven to be volatile in the past and may well remain so in the future. This provides additional opportunities to add
value through risk management as well as implement strategies that can benefit from this volatility.
- The Co-Portfolio Manager, Nigel Felgate PhD has an outstanding track record investing in energy and carbon markets for more than 15 years at
firms such as JP Morgan, Morgan Stanley and Merrill Lynch.
- Carbon Cap has committed 20% of performance fees to the purchase and cancellation of carbon allowances/offsets in order to
have direct climate change impact.
- We have calculated that a $5 million investment into the fund and a 10% net return, would result in approximately 1,000 tonnes of cancelled
carbon emissions per year. This is roughly equivalent to the carbon footprint of 100 individuals and greater than the annual carbon footprint of many family offices or small businesses including their business travel.
The combination of a favourable political tailwind, low correlation, plentiful sources of alpha, and high volatility lends itself well to an actively managed approach for the World Carbon Fund.
If you are an institutional or accredited sophisticated investor such as a family office, please get in touch with us for more information InvestorInfo@Carbon-Cap.com
Contact us for more information on the World Carbon Fund.