The KraneShares Global Carbon ETF (NYSE ARCA:KRBN) is an exchange-traded fund that seeks to track the performance of a specific index, which focuses on carbon credit futures that require physical delivery of emission allowances. These allowances are issued under cap-and-trade regimes, which are government-imposed programs aimed at reducing greenhouse gas emissions.
The fund's advisor aims to maintain exposure to these carbon credit futures, which are essentially contracts that give the holder the right to emit a certain amount of greenhouse gases. By holding these futures, the fund provides investors with a way to participate in the growing carbon market, which is driven by the increasing global effort to combat climate change.
The index that the fund tracks is designed to measure the performance of a portfolio of liquid carbon credit futures that require physical delivery. This means that the fund is focused on futures contracts that can be easily bought and sold, and that require the actual delivery of emission allowances rather than just cash settlement.
It's worth noting that the fund is non-diversified, which means that it may invest a significant portion of its assets in a limited number of securities. This can increase the fund's risk profile, but it also allows the advisor to focus on the most liquid and actively traded carbon credit futures.
Overall, the KraneShares Global Carbon ETF provides investors with a unique way to gain exposure to the global carbon market, which is expected to continue growing as governments and companies around the world work to reduce their carbon footprint and transition to a more sustainable future.