KCCA Profile
The KraneShares California Carbon Allowance ETF is designed to track the performance of futures contracts on carbon credits within the framework of California's carbon cap-and-trade program. The underlying index specifically measures the returns of futures contracts on California Carbon Allowances (CCAs) that are set to mature in December of the next one to two years. This index is a reflection of the market for carbon allowances within California's rigorous emissions trading system, which is a critical component of the state's climate policy.
The fund focuses on obtaining exposure to these carbon credit futures by investing at least 80% of its net assets in instruments tied to California Carbon Allowances. By aligning its investment strategy with the index, the ETF aims to provide investors with targeted exposure to the carbon allowances market. This market is characterized by its regulatory framework, which sets a cap on total emissions and allows companies to trade allowances as a means to incentivize reductions in greenhouse gas emissions.
The California carbon cap-and-trade system operates within a broader context of global environmental policies aimed at combating climate change. It functions by setting a cap on the total level of greenhouse gas emissions and allowing companies to buy and sell allowances that permit them to emit a specific amount of carbon dioxide. This market-based approach is designed to create economic incentives for companies to reduce their emissions and invest in cleaner technologies.
As a non-diversified fund, the KraneShares California Carbon Allowance ETF concentrates its investments in a specific niche of the carbon market, focusing exclusively on California Carbon Allowance futures. This concentrated approach allows for a more precise reflection of the performance of carbon credit futures under the California cap-and-trade system. Investors in this ETF gain exposure to a unique segment of the environmental market, which plays a significant role in the broader context of climate change mitigation efforts.
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