KFA Global Carbon ETF (NYSE: KRBN) Launches First US-listed ETF to Establish a Global Price for Carbon Emissions*
By Going Long the Price of Carbon Emissions Investors Can Support Positive Climate Action
30 Jul, 2020, 08:00 ET
NEW YORK, July 30, 2020 /PRNewswire/ -- Krane Funds Advisors, LLC, the investment manager for KFA Funds and KraneShares ETFs, today announced the launch of the KFA Global Carbon ETF (ticker: KRBN) on the New York Stock Exchange.
KRBN is benchmarked to IHS Markit's Global Carbon Index, which offers broad coverage of cap-and-trade carbon allowances by tracking the most traded carbon credit futures contracts. The index introduces a new measure for hedging risk and going long the price of carbon while supporting responsible investing. Currently, the index covers the major European and North American cap-and-trade programs: European Union Allowances (EUA), California Carbon Allowances (CCA), and the Regional Greenhouse Gas Initiative (RGGI).
"The climate crisis threatens life itself. Just as COVID-19 demanded an early response, so do the threats of climate disaster. One of the most powerful ways the world can collaborate to reduce emissions is to move toward carbon pricing that puts basic, free-market economics to work," said Former Secretary of State, John Kerry. John Kerry is the Chairman of the Climate Finance Partners Advisory Board (CLIFI), which is the sub-advisor to KRBN.
"A comprehensive global price for carbon emissions at a substantial level could encourage rapid shifts of resources to lower carbon technologies and incentivize research and development of carbon capture and clean energy," said Nobel Prize-winning Economist, Robert Engle, also a member of CLIFI's Advisory Board. "KRBN provides investors access to the carbon allowances futures market, which is vital to having the free market determine the price of CO2 pollution."
According to IHS Markit, as of July 29, 2020, the global price of carbon was $19.77 per ton of CO2. It is estimated that carbon allowance prices need to reach a range of $50 – $100 per ton of CO2 to achieve the emissions reductions goals of The Paris Agreement.1 As the Financial Times reported, over the past two years European carbon allowances within the European Union Emissions Trading System were the world's top-performing commodity.2. Past performance is not a guarantee of future results.
"This is a historic fund for global ESG investors. As of today, KRBN is the first US-listed ETF to combine the largest carbon allowance markets into a single investable fund," said Jonathan Krane, CEO of Krane Funds Advisors, LLC. "KRBN can support positive climate action by allowing investors to go long the price of carbon emissions."
Eron Bloomgarden, Founder of CLIFI, explained, "Following COVID-19, the climate crisis is perhaps the single largest long-term challenge facing the global community. Addressing climate change through carbon emissions pricing presents an enormous opportunity to rebuild a greener, safer, and more resilient economy."
"Across the world, there is a growing demand for investment solutions that facilitate the principles of environmental sustainability, while supporting economic development," said Sophia Dancygier, SVP and Global Head of Indices at IHS Markit. "We are proud to collaborate with Krane Funds Advisors and CLIFI on the launch of this innovative ETF tracking our Global Carbon Index."
For additional information on the KFA Global Carbon ETF (ticker: KRBN), contact your financial advisor or visit KFAFunds.com/KRBN.
About KFA Funds
Krane Funds Advisors, LLC is the investment manager for KFA Funds and KraneShares ETFs. We believe that investors should have cost-effective and transparent tools for attaining exposure to a wide variety of asset classes.
The KFA Funds product suite delivers differentiated, high-conviction investment strategies to global investors. We are passionate about identifying groundbreaking capital market opportunities and developing them into investment vehicles that offer a source of non-traditional diversification to our clients. Krane Funds Advisors, LLC is majority owned by China International Capital Corporation (CICC).
About Climate Finance Partners
Climate Finance Partners delivers innovative climate finance solutions and investment products to address capital needs for emerging environmental challenges. CLIFI is led by a team of investment professionals with deep experience in the fields of traditional investment and environmental finance.
About IHS Markit
IHS Markit (NYSE: INFO) is a world leader in critical information, analytics and solutions for the major industries and markets that drive economies worldwide. The company delivers next-generation information, analytics and solutions to customers in business, finance and government, improving their operational efficiency and providing deep insights that lead to well-informed, confident decisions. IHS Markit has more than 50,000 business and government customers, including 80 percent of the Fortune Global 500 and the world's leading financial institutions. Headquartered in London, IHS Markit is committed to sustainable, profitable growth.
Carefully consider the Funds' investment objectives, risk factors, charges and expenses before investing. This and additional information can be found in the Funds' full and summary prospectus, which may be obtained by visiting www.kfafunds.com. Read the prospectus carefully before investing.
Investing involves risk, including possible loss of principal. There can be no assurance that a Fund will achieve its stated objectives. ETF shares are not redeemable with the issuing fund other than in large Creation Unit aggregations. Instead, investors must buy or sell ETF Shares in the secondary market with the assistance of a stockbroker. In doing so, the investor may incur brokerage commissions and may pay more than net asset value when buying and receive less than net asset value when selling. The NAV of the Fund's shares is calculated each day the national securities exchanges are open for trading as of the close of regular trading on the New York Stock Exchange ("NYSE"), normally 4:00 p.m. Eastern time (the "NAV Calculation Time"). Shares are bought and sold at market price (closing price) not NAV. Market price returns are based on the midpoint of the bid/ask spread at 4:00 pm Eastern Time (when NAV is normally determined).
There is no assurance that cap and trade regimes will continue to exist, or that they will prove to be an effective method of reduction in GHG emissions. Changes in U.S. law and related regulations may impact how the way the Fund operates, increase Fund costs and/or change the competitive landscape.
The Fund invests through a subsidiary, and is indirectly exposed to the risks associated with the Subsidiary's investments. Since the Subsidiary is organized under the law of the Cayman Islands and is not registered with the SEC under the Investment Company Act of 1940, as such the Fund will not receive all of the protections offered to shareholders of registered investment companies.
The value of a commodity-linked derivative investment typically is based upon the price movements of a physical commodity and may be affected by changes in overall market movements, volatility of the Index, changes in interest rates, or factors affecting a particular industry or commodity.
The Fund and the Subsidiary will be considered commodity pools upon commencement of operations, and each will be subject to regulation under the Commodity Exchange Act and CFTC rules. Commodity pools are subject to additional laws, regulations and enforcement policies, which may increase compliance costs and may affect the operations and performance of the Fund and the Subsidiary. Futures and other contracts may have to be liquidated at disadvantageous times or prices to prevent the Fund from exceeding any applicable position limits established by the CFTC. Additionally, the Fund's investments are subject to liquidity risk, which exists when an investment is or becomes difficult to purchase or sell at a reasonable time and price.
Investments in non-U.S. instruments may involve risk of loss due to foreign currency fluctuations and political or economic instability. The Fund's assets are expected to be concentrated in an industry or group of industries to the extent that the Index concentrates in a particular industry or group of industries. The Fund is non-diversified.
The KFA ETFs are distributed by SEI Investments Distribution Company (SIDCO), 1 Freedom Valley Drive, Oaks, PA 19456, which is not affiliated with Krane Funds Advisors, LLC, the Investment the Investment Adviser for the Fund, Climate Finance Partners (CLIFI), or IHS Markit.
- World Bank State and Trends of Carbon Pricing 2019
- Financial Times, April 17, 2019 "Niche asset nears mainstream as investors warm to EU carbon market"
*Data from Bloomberg as of 7/20/2020
SOURCE Krane Funds Advisors, LLC
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