The KraneShares California Carbon Allowance ETF (NYSE ARCA:KCCA) is an investment fund that tracks the performance of a specific type of futures contract related to carbon credits. These credits are issued by the California government as part of its 'cap and trade' program, which aims to reduce greenhouse gas emissions in the state.
The fund focuses on a particular segment of the carbon credit market, specifically futures contracts that mature in December of the next one to two years. This means that the fund is invested in contracts that will settle in the near future, rather than those with longer-term maturities.
The ETF's investment strategy is designed to closely follow the performance of the underlying carbon credit futures contracts. To achieve this, the fund will typically hold at least 80% of its net assets in instruments that provide direct exposure to California Carbon Allowances. This means that the fund's performance will be closely tied to the value of these carbon credits.
It's worth noting that the fund is considered non-diversified, which means that it may invest a significant portion of its assets in a single type of security or a limited number of securities. This can make the fund more sensitive to changes in the value of those securities, but it also allows the fund to focus on a specific area of the market.