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KraneShares Global Carbon Strategy ETFKraneShares Global Carbon Strategy ETFKraneShares Global Carbon Strategy ETF

KraneShares Global Carbon Strategy ETF

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KRBN trade ideas

KRBN ETF : Holding more cash than actual carbon futuresKRBN tracks the global carbon allowances prices in Europe, the UK and the US which did really well in 2020-2021 albeit at high volatility. However, as we entered 2022 KRBN price started to decline then now recovering slowly. Somehow over the past year and till now in 2023, its holdings of cash and bonds have increased up to 85% of the total holdings. I understand interest rates have been high and holding more cash in 2022 is the safest option to take amidst the uncertain global and geopolitical market environment. The dividend payout was also much higher in 2022 vs 2021. Moreover, it provides a very comfortable cushion if there is a sudden drop in the carbon futures caused by the Russia-Ukraine war. However, I can't help to feel like a big opportunity loss when the carbon allowance futures prices actually did well e.g. California carbon allowance. Given that the tenure of the ETF is barely 3 years old, I believe this reflects how the fund managers for the ETF take into consideration of the risks and really did try to stabilise the KRBN prices. Now that the carbon futures have proven that they are resilient to geopolitical changes, I hope the fund managers will start using the cash and increase exposures in the carbon allowance futures and allocate base on their expertise.
AMEX:KRBN
by Dynamiac
CARBON - THE TRADE OF A LIFETIME?This is not a long recommendation unless you are highly confident in your trading abilities and have the discipline to stop out and look for a better entry. For everyone else, waiting for a pullback to an area closer to the broader trend line is desirable. Always trade with an appropriate stop loss relative to your risk tolerance. This post is an idea, not advice. Great, now that's out of the way, let me proceed. Politicians have frequently told us that pollution shouldn't be free and that taxing carbon emissions will mitigate climate change. Some politicians, such as Prime Minister Trudeau of Canada, have explicitly stated his government wants to put a price on carbon, and they have succeeded in doing so. Canada intends on drastically raising their carbon tax to $130(usd) per metric ton by 2030, and other countries will likely follow suit. As carbon taxes become common among developed nations and governments attempt to transition to a "green economy," what does one imagine will happen to the carbon price? Will it go down to all-time lows? Will we somehow increase carbon supply, making it dirt cheap, even as we attempt to eliminate and tax emissions? Governments worldwide are now trying, for better or worse, to rid the world of carbon emissions. In other words, reduce the supply of carbon. What happens when you reduce the supply of a commodity? Logic tells us that the price should go higher. As of this post's writing, the price of carbon is $28 per ton of CO2. The World Bank estimates that carbon allowances must reach $50-$100 per ton of CO2 to achieve the goals of the Paris Agreement. As emitting CO2 becomes more expensive through taxes and carbon allowances, the supply of carbon should shrink, driving up the price. KRBN is a relatively new ETF that tracks the HIS Markit Global Carbon Index. The index covers major European and North American cap-and-trade programs. Please view their website for more information. Looking at the chart of KRBN I can't help but notice when the record volume began pouring in. Whether or not the price increase is directly related to Biden's stimulus plan, we will never know. Nevertheless, the writing on the wall seems clear: the price of carbon must go up as world leaders attempt to coordinate the biggest supply squeeze in history. Keep in mind that KRBN and the HIS Global Carbon Index are up over 50% since Nov 2/2020—perhaps when it became clear to a subset of investors that Biden would take the Presidency and bring the U.S. into the Paris Agreement. It's not hard to imagine a future where emitting carbon becomes expensive beyond belief, but this is not a guaranteed outcome. If carbon capture technology becomes widely adopted, there may be a considerable supply increase as the captured carbon is put to other uses. In my opinion, this seems unlikely but is worth mentioning.
AMEX:KRBN
by Level8Trading
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