In August, the World Carbon Fund (WCF) rebounded with a net return of +3.63%, a significant improvement from July’s -1.66% loss. This marks a strong recovery for the fund, which tracks five major carbon markets, four of which posted gains during the month. In comparison, WCF had recorded a modest +0.40% return in August 2023. For the first eight months of 2024, the fund has achieved a year-to-date return of +8.16%.
Managed by London-based Carbon Cap Management LLP, the WCF has managed assets across key carbon markets since its launch in 2020, including the EU Emissions Trading Scheme (ETS), the UK ETS, California’s Carbon Allowance (CCA), the US Regional Greenhouse Gas Initiative (RGGI), and New Zealand’s carbon market. By the end of August, the fund’s assets under management (AUM) reached $476 million, surpassing $500 million in early September.
Among the tracked markets, the RGGI was the only one to post a negative performance in August, marking its first decline since February. In contrast, CCA prices experienced their first positive movement since January. The EU carbon market saw moderate gains, while the UK ETS rose significantly, driven by speculation that the new government may adopt stronger environmental policies. New Zealand’s carbon market emerged as the top performer, with prices surging after a government announcement to reduce future auction supply and maintain the auction price floor.
The WCF’s Core Strategy, which operates across all five markets, gained +3.78% in August, buoyed by its overweight positions in the UK and California markets. Additionally, its Alpha Strategies, focused on arbitrage and short-term trading, posted a +0.49% gain, capitaliaing on relative value opportunities and market fluctuations.
The fund’s diverse approach to carbon markets has delivered consistent returns throughout 2024, bolstered by strategic positioning and market movements.