The AirShares (ASO) Carbon Fund [web link to product home page] is set to begin trading on Monday 12/15/08 for XShares. The AirShares website contains details on the fund's structure and holdings, as well as information on climate change and carbon investing – including a multimedia resource center which is a compilation of videos, white papers and news articles designed to be a leading online reference for carbon investing information.
The closest existing product is the iPath Global Carbon ETN (GRN), which has $4.3M in net assets and tracks the Barclays Capital Global Carbon Index Total Return™ -- providing exposure to the two most established and liquid proxies for carbon prices:
1.) European Union Allowances or EUAs (which are tradable emission credits from the EU Emissions Trading Scheme providing the right to emit one ton of carbon dioxide, representing 79.7% of GRN).
2.) Certified Emission Reductions or CERs (which are credits generated under Kyoto’s Clean Development Mechanism for the reduction of greenhouse gas emissions equal to one ton of carbon dioxide equivalents, representing the other 20.3% of GRN).
Below is a summary of the AirShares fund details and investors should note that GRN is actually a debt obligation as an ETN while AirShares is structured as a commodity pool fund. Also, AirShares is designed to hold a basket of EUAs while GRN contains a mix of EUAs and CERs.
The accompanying six month chart illustrates that GRN has withstood the downturn in commodities and the markets since it began trading July 8, with the following returns since that time: GRN down 38.7%, U.S. Oil Fund (USO) down 65.3%, U.S. Natural Gas Fund (UNG) down 60%, and S&P 500 SPDR (SPY) down 29.6%.
AirShares EU Carbon Allowances Fund is a commodity pool that seeks to provide investors with investment results generally corresponding, before payment of expenses and liabilities, to the performance of a basket of exchange-traded futures contracts for European Union Allowances (EUAs). An EUA is an entitlement to emit one metric ton of carbon dioxide equivalent that is transferable under the European Union Greenhouse Gas Emissions Trading Scheme (EU ETS). The EU ETS is a cap-and-trade program that provides financial incentive for signatory countries of the Kyoto Protocol to reduce their carbon emissions.
AirShares is a commodity pool subject to the rules of the Commodity Futures Trading Commission (CFTC). AirShares is listed on NYSE Arca, providing investors with the flexibility of intraday trading and the ability to buy on margin. Initially, ASO’s portfolio holds unleveraged long positions in European Carbon Exchange Carbon Financial Instrument Futures Contracts (ECX CFI Futures Contracts), traded on the ICE Futures trading platform, operated by ICE Futures, a subsidiary of the Intercontinental Exchange® Each contract provides for delivery of 1,000 EUAs at a specified price.
The EUA futures contracts ASO invests in expire in December of years 2009-2012. These years comprise the remainder of Phase II of the EU ETS and the first commitment period covered by the Kyoto Protocol. As contracts approach their December expiration, the fund sells expiring contracts and replaces them with contracts of later expirations. The fund also seeks to hedge the currency risk associated with fluctuations in the Euro/U.S. dollar exchange rate. AirShares is passively managed.
$40.12 (12/15/08)
