The World Carbon Fund (WCF) achieved a positive return of +6.22% in 2024, outperforming compliance carbon markets for the fifth consecutive year, according to an investment update released Friday.
Ground-level view of a wooded field with lush green deciduous trees stretching to the horizon. AI generated picture.
This accomplishment comes despite four out of the five compliance markets tracked by the WCF ending the year in negative territory. The fund, which was established in 2020, manages $520 million in assets and invests across major markets, including the EU Emissions Trading Scheme (ETS), UK ETS, California's CCA, RGGI in the US, and the New Zealand ETS.
The WCF’s annual return, however, marked its lowest gain since its inception. Previous annual gains ranged from +8.96% in 2022 to an impressive +52.6% in 2021. December alone saw a marginal gain of +0.68%, up from November’s +0.27% but lower than December 2023’s +3.31%.
Heightened volatility and mixed pricing dominated the compliance markets in December. The EU ETS rebounded with a +3.5% gain, while the UK market saw continued declines of -6.7%, attributed to increased wind power generation and subdued sentiment. California's CCA market remained nearly flat and exhibited instability due to programme uncertainties and declining road transport emissions, which dropped 8% year-on-year.
RGGI stood out as December’s top performer with a +6% increase, while New Zealand ETS prices dipped slightly, ending the month down -0.5%.
The WCF’s December performance was driven by gains in its Core Strategy, which focuses on long-biased tactical investments in the five carbon markets, complemented by an options overlay. This strategy yielded +0.68% gross for the month. Additionally, its Alpha Strategies, which include arbitrage and relative value trading, contributed a +0.27% gross return.
Despite challenging conditions, the WCF remains a standout performer in the carbon markets, demonstrating resilience and effective management strategies.
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At DGB Group, we are dedicated to empowering businesses and individuals to take meaningful steps toward reducing their carbon footprints and fostering a sustainable future. From large-scale reforestation and afforestation projects to initiatives like energy-efficient cookstoves, our focus remains on restoring ecosystems, enhancing biodiversity, and creating sustainable livelihoods for local communities. These aligned efforts provide a resilient and practical pathway to address the environmental challenges highlighted in the World Carbon Fund’s 2024 performance, demonstrating how impactful strategies can drive both ecological restoration and socio-economic progress.
