![]() ![]() The KraneShares Electrification Metals ETF (KMET)offers targeted exposure to the metals that will be necessary for electrification. “These metals are going to be the driver of future energy and not fossil fuels,” Oliver explained. This increased demand will meet supply constrictions and create a material repricing of electrification metals. “There is going to be a huge demand for these particular commodities over the next five to 10 years,” said Oliver. These metals include lithium, cobalt, copper, aluminum, and more. This in turn will create increased demand for several specific metals. It also means increasing renewable energy sources such as solar panels and upgrading electrical grids. Transitioning to net-zero emissions means an increase in electric vehicles and EV batteries. The New Economy Carries New Commodity Demands KARS captures the growth in batteries, hydrogen fuel cell manufacturing, EV production, and more. The KraneShares Electric Vehicles and Future Mobility ETF (KARS) invests across the EV ecosystem. “They’re also being revalued as this old, traditional, industrial stock to a fast-growing, green energy or green tech firm.” It also includes investing in companies currently considered dirty but those that are actively working to transition to renewables and net-zero emissions.Ĭompanies that transition have an outsized impact during their transition, and after, Oliver explained. These companies are already growth-oriented and most likely to propel decarbonization forward at a faster rate. ![]() This includes electric vehicle manufacturers and future mobility companies. This includes a long position in what Oliver refers to as the “solutions”. See also: “ Luke Oliver Talks Carbon Allowances and Innovation“ Barbell Opportunities in EquitiesĮquities present another opportunity to capture the decarbonization cycle. More targeted options include the KraneShares European Carbon Allowance Strategy ETF (KEUA) and the KraneShares California Carbon Allowance Strategy ETF (KCCA). ![]() KRBN invests in carbon allowances futures globally from the EU, California, RGGI, and the U.K. KraneShares’ carbon allowances suite of funds includes the KraneShares Global Carbon Strategy ETF (KRBN). “This is where the smart money is moving.” “We’re seeing the institutions, the ultra-high-net-worth family offices gravitating towards these carbon markets,” explained Oliver. Larger investors are already positioning to capture. Carbon markets put prices on emissions and pollution, and the major markets utilize tightening mechanisms to reduce supply and increase demand.ĭespite economic slowing and challenges, it’s a space with upside potential in the coming years. Global cap-and-trade, or carbon allowance markets, are regulated markets that governments use as mechanisms of change. The carbon market is the place where investors can find both growth and diversification opportunities looking ahead. 3 Pillars to Capture the Carbon Macro Trend Carbon Markets The majority of investors currently remain unhedged against decarbonization impacts or long transition solutions. “Your portfolio is short this story,” Oliver cautioned. It also includes investing in carbon allowances and carbon markets. This includes equity capture via transitioning companies or high-demand metals for electrification. Those solutions present investors with a number of ways to capture the major economic shift towards net zero. “The real capital moves towards real solutions with real economic return” Oliver explained. It’s a monumental shift that the KraneShares climate ETF suite is positioned to capture and capitalize on. Of that, Oliver explains that $130 trillion funnels into the energy transition specifically. Around $250 trillion will need to be invested to meet 2050 net zero goals according to McKinsey estimates. ![]() The shifting of economies and industries to decarbonize will take an enormous sum of money. “The commitments are made, the money is in flow, and we are seeing the largest capital cycle in history.” “Regardless of your politics, regardless of your views on climate, on ESG, we are decarbonizing the global economy,” Oliver said. In fact, it’s the most substantial macro capital trend in modern history and it’s happening right now.ĭecarbonization is “a trend that is bigger than any macro megatrend that we’ve seen to date,” explained Luke Oliver, head of climate investments at KraneShares, in a recent video. Megatrends remain ever changing but there’s an even larger super cycle in global markets that many investors may be missing. Semiconductors, AI, crypto - megatrend investing remains a popular option for all manner of advisors and investors. ![]()
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