Global X launches Global Carbon ETF with lowest fees in market

Global X launches Global Carbon ETF with lowest fees in market

The Global X Global Carbon ETF (Synthetic) (ASX: GCO2) is launching – bringing Australian investors the lowest-cost fund of its kind, alongside an opportunity to support net-zero efforts closer to home through the Yarra Yarra Biodiversity Corridor ‘Plant-a-Tree’ program.

GCO2 tracks the ICE Global Carbon Futures Index to provide access to the world’s largest carbon markets covering the European Union Emissions Trading Scheme, Regional Greenhouse Gas Initiative, Western Climate Initiative (California cap and trade program) and the UK Emissions Trading Scheme.

The fund is currently the lowest-cost carbon ETF in the country, with a management fee of 0.45% per annum.

Global X Head of Investment Strategy, Blair Hannon says international political pressure, capital expenditure and built-in supply declines will contribute to the growing investment case for carbon allowances.

“We are witnessing a watershed moment as investors seek out climate-focused investment opportunities, but do not want to compromise on potential returns. GCO2 is an innovative way to leverage the global transition to net-zero, which has significant tailwinds, thanks to government backed climate change targets,” Hannon said.

“Carbon emissions are front of mind for governments and the public alike, so as global decarbonisation and clean energy initiatives become more ambitious, demand for carbon allowances will likely increase – which we expect to push up the price of carbon over the medium to long term.”

Carbon allowances are traditionally a difficult, illiquid asset to access, so adding them to a portfolio works as a diversification tool as well as a growth opportunity.

In an effort to support domestic climate change initiatives, Global X is also contributing 10% of GCO2’s annual management fees towards the Yarra Yarra Biodiversity Corridor ‘Plant-a-Tree’ program, which is creating a green corridor to reconnect coastal regions with drier inland habitats.

Trees will be planted in Western Australia’s wheatbelt region, which is importantly one of only 36 biodiversity hotspots in the world.

“Global X is supporting the Yarra Yarra Biodiversity Corridor ‘Plant-a-Tree’ program because we understand how important climate-related issues are for investors and this is our way of acknowledging the fight against climate change is a community effort,” Hannon said.

GCO2 is the fourth product launched by Global X ETFs Australia since it rebranded from ETF Securities in September 2022 and is the 27th addition to Global X’s growing stable of future-focused funds with almost $5 billion in assets under management in Australia.