Australian investment manager Apostle Funds Management (Apostle) has launched a new Global Carbon Credit Fund (the Fund) with an initial seed investment from TelstraSuper.
The Fund offers exposure to global carbon markets for sophisticated and institutional investors and will seek to outperform a global carbon benchmark by at least 2% p.a. net of fees over rolling 5-year periods.
Apostle’s Partner, Global Carbon Markets Luke Donovan said: “Apostle’s Global Carbon Credit Fund offers sophisticated investors the opportunity to take an active role in global decarbonisation and we are pleased to bring this solution to the market amid extensive investor demand.”
“Compliance Carbon markets have a strong outlook and are an essential component of a low-emission economy. These markets are regulated and mandated by governments worldwide, with oversight and control mechanisms in place to ensure integrity and scalability. Our fund provides a robust return outlook and diversification with other asset classes while also serving as a hedge against climate risk and inflation,” he added.
The Sydney-based fund managers’ wholesale unregistered Fund is actively managed with diversification across major markets in California, Europe, the UK, New Zealand and Australia. This fund said this approach offers investors holistic exposure to the carbon price and helps reduce volatility through jurisdictional diversification.
The Apostle Carbon Credit Fund benchmark provides investors with beta carbon price exposure to both established and emerging carbon markets. This is combined with an active management component that delivers greater opportunity for alpha and provides superior returns at a lower risk. The Fund is constructed using a mixture of physical credits and futures.
“We believe a ton of carbon is a ton of carbon – regardless of the country it is from. This is why we’ve chosen the breadth of markets and why the benchmark is constructed with even distribution across each market,” said Donovan.
“It’s clear that in order to incentivise the type of transition needed in our economy the price of carbon needs to be higher. Institutional investors have an important role to play in this process, by participating in compliance carbon markets they increase liquidity and sophistication which ultimately drives greater price discovery. High-functioning compliance carbon markets are a key pillar to the efficient and timely allocation of capital in the race to reduce emissions in our economy. This is what we are offering,” added Donovan.
Donovan has over 15 years of deep expertise within the energy finance sector and carbon trading. He was most recently Executive Director of Carbon and Power Markets at Commonwealth Bank of Australia (CBA) where he was responsible for CBA’s Carbon Emissions trading globally and pivotal to establishing its presence in the Australian Carbon Market.
Prior to his time with the bank he experienced a decade tenure at Origin Energy, building Australia’s largest industrial customer portfolio in energy and carbon trading.