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In August, the World Carbon Fund (WCF) bounced back into positive territory, reporting a net return of +3.63%, a significant improvement compared to July's -1.66% loss. This marks a recovery for the fund, which tracks five key carbon markets, four of which posted gains during the month. In comparison, the WCF achieved a modest +0.40% return in August 2023. For the first eight months of 2024, the WCF has posted a year-to-date return of +8.16%.
Drone photo of newly planted tree seedlings. AI generated picture.
Launched in 2020, the WCF manages assets across carbon markets like the EU Emissions Trading Scheme (ETS), the UK ETS, California’s Carbon Allowance (CCA), the US Regional Greenhouse Gas Initiative (RGGI) cap-and-trade systems, and New Zealand’s carbon market. By the end of August, the fund’s assets under management (AUM) reached $476 million, surpassing $500 million by 1 September.
Among the markets tracked, RGGI was the only one to post a negative performance in August, marking its first decline since February. In contrast, CCA prices saw a rebound, their first positive movement since January. The EU carbon market showed modest gains, while the UK ETS saw a notable rise due to indications that the new government may take stronger environmental action.
Read more: 100 Reasons carbon credits are the best thing that ever happened to improve conditions on our planet
New Zealand’s carbon market was the strongest performer, with prices significantly increasing due to a government announcement to reduce future auction supply and retain the auction price floor. Despite this, the early September NZ Units auction will be carried forward to the December auction for a fresh chance at success.
Read more: New Zealand government tightens carbon credits supply
The WCF’s Core Strategy, which works across these five markets, gained +3.78% in August, thanks to overweight positions in the UK and California markets. Meanwhile, its Alpha Strategies, which involve arbitrage and short-term trading, also saw gains of +0.49%. These strategies target returns through arbitrage, relative value, and other short-term trading opportunities.
Overall, the WCF’s diverse approach to carbon markets has driven consistent positive returns through 2024, aided by strategic investments and market fluctuations.
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