KEUA Profile
The KraneShares European Carbon Allowance Strategy ETF is designed to track the performance of futures contracts tied to carbon credits within the European Union Emissions Trading System (EU ETS). The EU ETS operates under a "cap and trade" framework, where a cap is set on the total level of emissions and companies are issued carbon allowances that they can trade. This system is part of the European Union's broader strategy to reduce greenhouse gas emissions and transition to a low-carbon economy.
The index utilized by the ETF includes futures contracts on carbon credits that are scheduled to mature in December of the current year and the next. By focusing on these short- to medium-term futures, the ETF aims to capture the performance of carbon allowances that reflect current market conditions and regulatory changes within the EU ETS. The ETF generally aims to replicate the exposure of the index by investing in similar carbon credit futures contracts.
To align with its investment strategy, the fund commits at least 80% of its net assets to instruments that provide exposure to European carbon allowances. This includes directly investing in carbon credit futures and potentially other related financial instruments. The ETF is non-diversified, meaning it has concentrated exposure to a specific sector—carbon allowances—and does not hold a broad array of different asset classes.
The KraneShares European Carbon Allowance Strategy ETF is geared toward investors seeking targeted exposure to the carbon markets in Europe, driven by the EUs carbon pricing mechanisms. This focus on carbon allowances is intended to benefit from the regulatory framework designed to cap emissions and drive up the cost of carbon, thereby incentivizing lower emissions. By concentrating on this niche market, the ETF provides a specialized investment opportunity for those interested in the environmental and regulatory trends shaping the future of carbon trading in Europe.
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