3EDGE Asset Management positions itself with its ESG strategies in the market for emission certificates
By Fritz Folts, Chief Investment Strategist, 3EDGE Asset Management
3EDGE Asset Management has positions in its tactical ESG strategies (Environmental, Social and Governance) in KraneShares Global Carbon ETF (NYSE: KRBN) which tracks the performance of the emissions allowance market. KRBN offers broad exposure to Cap-and-Trade Certificates by tracking the most widely traded futures contracts on carbon credits. The index provides a vehicle for long positions in the price of carbon while promoting responsible investing. According to the Wall Street Journal, due to growing awareness and recent warming trends, companies have changed their environmental efficiency standards and invested in the new carbon trading scheme.
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3EDGE Asset Management launched its ESG strategy in January 2018 and its aggressive ESG strategy earlier this year. Fritz Folts, Chief Investment Strategist at 3EDGE, said, “We believe that the recent investment in the global carbon market in our ESG strategies represents an excellent long-term opportunity. The value of carbon credits should continue to rise as companies around the world come under increasing pressure to reduce their carbon footprint as the world turns away from fossil fuels. Pricing carbon is a logical and powerful market-based solution to addressing the challenge of climate change. “
The prices of carbon credits can rise as demand increases from companies that use them to offset their carbon emissions. But they can also go up if investors bid and raise the price, making it more expensive for carbon-producing companies to buy the credits and putting financial pressure on them to directly reduce their emissions. Investing in the emission allowance market has the potential for significant long-term growth as the transition from fossil fuels and the achievement of climate agreements and goals can take a long time.
Investing in the emission allowance market offers:
- Support for responsible investment and incentives to reduce pollution in line with ESG investment objectives.
- Additional portfolio diversification due to the historically low correlation of the global CO2 futures markets with other asset classes.
- One way to potentially benefit from the ongoing carbon tightening
Emissions regulations worldwide.
“We believe that our tactical approach to ESG investing can be a sleek and simple solution for investors looking for ways to get their investments better reflected, especially when it comes to climate change and the environment.”
3EDGE Asset Management, LP, is a global multi-asset investment management company serving institutional investors, the advisory market and retail clients. 3EDGE strategies act as tactical diversifiers with the aim of achieving consistent, long-term investment returns regardless of market conditions while managing downside risks.
The most important investment instruments for portfolio construction are index exchange traded funds (ETFs). The investment research process is controlled by the company’s own global capital market model. The model is tested under a wide variety of economic and market conditions and translates decades of research and investment experience into a system of causal rules and algorithms for describing global capital market behavior. 3EDGE offers a full range of solutions, each with a target return and risk parameters to meet the diverse goals of investors. Of course, investing carries risks and the possible loss of your investment. There is no guarantee that a target return will be achieved.
DISCLOSURES: This announcement is provided for informational purposes only to current and prospective customers of 3EDGE Asset Management. The opinions expressed are subject to change without notice and are not intended as personal investment advice. Investors should only seek investment advice from their personal financial advisor. Observations include information from sources that 3EDGE believes to be reliable, but the accuracy of such information cannot be guaranteed. Investments including ETNs, ETFs, common stocks, fixed Income and commodities carry the risk of loss that investors should be prepared to accept. Past performance is not an indication of future results.