XShares Advisors LLC, an industry leader in developing innovative exchange traded funds (ETFs), today announced the launch of trading in the AirShares EU Carbon Allowances Fund (NYSE Arca: ASO). The registered investment advisor is launching the first U.S. traded product that provides exposure to the fast growing carbon market by holding European Union Allowances (EUAs) futures contracts.
AirShares EU Carbon Allowances Fund is a commodity pool that seeks to provide investors with investment results generally corresponding, before payment of the fund’s expenses and liabilities, to the performance of a basket of exchange traded futures contracts of EUAs. An EUA is an entitlement to emit one metric tonne of carbon dioxide equivalent that is transferable under the European Union Greenhouse Gas Emissions Trading Scheme (EU ETS). Although ASO is a commodity pool, it provides investors with the flexibility of intra-day trading and the ability, for example, to buy on margin or go short.
During the first nine months of 2008, the global carbon market grew 81% to $87 billion and is on track to clear $100 billion by year end, according to New Carbon Finance research released October 2008. The report also noted that the carbon market remains relatively insulated against the turbulence affecting other markets.
Initially, ASO’s portfolio holds unleveraged long positions in ICE Futures (Intercontinental Futures Exchange) or European Climate Exchange Carbon Financial Instrument Futures Contracts (ECX CFI Futures Contracts). Each contract provides for delivery of 1000 EUAs at a specified price.
The EUA futures contracts ASO invests in will expire in December of years 2009 through 2012. As contracts approach their December expiration, the fund sells expiring contracts and replaces them with contracts of later expirations. ASO also seeks to hedge the currency risk associated with fluctuations in the Euro/U.S. dollar exchange rate.
AirShares is a passively managed, equity product and does not track an index. Although the futures contracts held by the fund and most of its assets are denominated in Euros, the shares trade in U.S. dollars.
For more information about the AirShares EU Carbon Allowances Fund, a history of carbon trading, or to download a prospectus, please visit www.xsharesadvisors.com/airshares/prospectus.
