Hitting the market on Wednesday, 14 December, the Global X Global Carbon ETF (Synthetic) (ASX: GCO2) also supports net zero efforts through the Yarra Yarra Biodiversity Corridor ‘Plant-a-Tree’ program.
Global X said GCO2 tracks the ICE Global Carbon Futures Index and provides access to the “world’s largest carbon markets covering the European Union Emissions Trading Scheme, Regional Greenhouse Gas Initiative, Western Climate Initiative (California cap and trade program) and the UK Emissions Trading Scheme”.
With a management fee of 0.45 per cent per annum, Global X said the fund is currently the lowest-cost carbon ETF in the country.
Global X head of investment strategy, Blair Hannon, said the investment case for carbon allowances will continue to grow due to international political pressure, capital expenditure and built-in supply declines.
“We are witnessing a watershed moment as investors seek out climate-focused investment opportunities but do not want to compromise on potential returns. GCO2 is an innovative way to leverage the global transition to net zero, which has significant tailwinds, thanks to government-backed climate change targets,” Mr Hannon said.
“Carbon emissions are front of mind for governments and the public alike, so as global decarbonisation and clean energy initiatives become more ambitious, demand for carbon allowances will likely increase, which we expect to push up the price of carbon over the medium to long term.”
The firm added that carbon allowances are traditionally a difficult, illiquid asset to access, meaning the ETF works as a diversification tool in addition to a growth opportunity.
Global X said it would contribute 10 per cent of GCO2’s annual management fees towards the Yarra Yarra Biodiversity Corridor ‘Plant-a-Tree’ program, which plants trees in Western Australia’s wheat belt region with the aim of creating a green corridor to reconnect coastal regions with drier inland habitats.
“Global X is supporting the Yarra Yarra Biodiversity Corridor ‘Plant-a-Tree’ program because we understand how important climate-related issues are for investors and this is our way of acknowledging the fight against climate change is a community effort,” Mr Hannon said.
GCO2 is the fourth product launched by Global X ETFs Australia since it rebranded from ETF Securities in September 2022, and it also has an ambitious plan to introduce at least 10 new ETF strategies to local investors next year, while further expanding its Australian-based team.
According to Global X Australia CEO Evan Metcalf, the firm’s goal is to become the country’s “preeminent leader” in thematic, commodity and digital asset ETFs.
