Exposure to the price of carbon as driven by the world’s biggest and most developed emission trading schemes.
Medium to long term growth potential backed by global initiatives and regulations to reach net-zero targets.
Unique Asset Class
Gain diversification with a unique asset class which is reasonably uncorrelated to other assets including oil prices.
Product Information As of 8 Dec 2023
12 Dec 2022
Management Costs (% p.a.)
Managed Investment Scheme
NAV Information As of 8 Dec 2023
GCO2 offers 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 seeks to provide returns which correspond generally to the performance, before fees and expenses, of the ICE Global Carbon Futures Index (the “Index”). The fund is currently the lowest cost of its kind in Australia.
GCO2 AU Equity
10:00AM – 4:00PM
Management & Administration
Global X Management (AUS) Limited
The Hongkong and Shanghai Banking Corporation Limited, Sydney Branch
Computershare Investor Services Pty Limited
ICE Global Carbon Futures Index (AUD Total Return)
Carbon futures are derivatives whose values are connected to carbon emissions allowances, such as the European Union’s Emissions Trading Scheme (ETS) or the Western Climate Initiative. These futures are deliverable, meaning that on expiry the holder takes ownership of the carbon allowances that their futures are connected to.
Carbon futures are traded on regulated exchanges, mostly by utilities companies and financial institutions. ETFs that hold these futures are required to sell their futures before expiry and buy new ones, in a process called “rolling”.
What can’t GCO2 trade carbon credits themselves?
Carbon allowances exist as digital entries in government registers. They are illiquid and do not trade on exchange. Instead, they are traded in different places and different ways, often bilaterally between emitters. This can make them arguably less well-suited to investment by ETFs than futures contracts. ETFs need to hold liquid assets in order to ensure smooth and efficient trading and pricing.
How is GCO2 correlated to other traditional investments
Carbon allowances exhibit low correlations to traditional Australian investments like shares, bonds, commodities, cash and property. Reasons for these low correlations include:
• Non-economic players – like governments, which give allowances away for free – are major carbon market
• Carbon markets are more centrally controlled with more idiosyncratic regulations.
• Participants’ Carbon allowances have no cash flows, and therefore do not fit neatly into conventional valuation frameworks.
How does the tree planting initiative work?
Global X is partnering with Carbon Neutral, a business specialising in reforestation, to plant and maintain trees in the Yarra Yarra biodiversity corridor in Western Australia. As part of this, Global X will contribute 10% of GCO2’s management fee each quarter to participate in Carbon Neutral’s Plant-a-Tree Program.
The Plant-a-Tree Program is a reforestation project helping to reconnect small patches of remnant vegetation to create a 200km green corridor and protect plant and animal life.
Global X will provide investors with a statement of the positive environmental impact management fee donations have provided at the end of each quarter. For more information please read out compliance policy located on the fund page.
Does GCO2 provide a carbon offset?
GCO2 does not provide any carbon offset, nor does it invest in, hold or issue any carbon offsets. The fund invests exclusively in carbon allowances and specifically in futures contracts connected to them.
Investors should be sure to understand the differences between carbon offsets – of the kind issued by Australian government’s Clean Energy Regulator – on the one hand. And carbon allowances – of the kind found in the European Union’s Emissions Trading Scheme – on the other hand.
Carbon offsets are voluntary and mostly unregulated programmes. They allow business to theoretically offset their emissions and make “carbon neutral” products by doing things like renting forests. Carbon allowances by contrast are mandatory and highly regulated programs that require emitters to pay for their carbon dioxide emissions or face large fines.
How can I use GCO2 in a portfolio?
GCO2 can be used to capture any potential rise in carbon prices. In order to incentivise an orderly transition to clean energy, global governments have steadily shrunk the supply of carbon allowances each year. This has helped send carbon prices higher over the past several years. However past performance does not guarantee future returns.
GCO2 can also be used as a portfolio diversifier, as carbon allowances exhibit low correlations with other asset classes and have nothing of their kind available in Australia.
Lastly, it can be used as an environmental allocation in a portfolio as carbon allowances are considered to be a practical instrument for curbing greenhouse gas emissions.
What carbon allowances are included in GCO2?
GCO2 invests in four carbon markets: the European Union ETS, the California-based Western Climate Initiative (WCI), the New York-headquartered Regional Greenhouse Gas Initiative (RGGI) and, the UK ETS.
The EU provides the largest carbon allowance market, constituting 50% of the fund’s weight at each rebalance. The EU’s carbon allowances are the major index component as its carbon market is the largest, most liquid, and most ambitious. All major emitters, including utilities companies, steel manufacturers, airlines and many more are required to participate.
RGGI is a cooperative effort among the northeastern US states of Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania, Rhode Island, Vermont, and Virgini. It is narrower than the EU ETS and only applies to powerplants above a certain size. The weights of RGGI futures are floored at 5% in the index.
The WCI includes California, and Washington state – but also the Canadian provinces of Quebec and Nova Scotia. It applies to oil refiners, power plant operators, and other large emitters.
The UK ETS is very similar in its design to the EU ETS. It applies to the power generation sector, aviation, and energy intensive industries.
Global X Management (AUS) Limited makes no representations, warranties, endorsements, or recommendations regarding any broker, adviser, or other financial intermediary, nor are we affiliated with these entities. Ask such entities or persons about any conflicts of interest that may influence such entities or persons to recommend Global X ETFs over another investment. By clicking the links above you are leaving globalxetfs.com.au and visiting a third-party website. Global X Management (AUS) Limited is not responsible for the contents of third-party websites.
Investments may go up or down in value and you may lose some or all of the amount invested. Past performance is not necessarily a guide to future performance. Any advice provided by Global X Management (AUS) Limited (“Global X”) is general advice and does not take into account your personal objectives, financial situation or needs. You should consult an independent investment adviser prior to making an investment in order to determine its suitability to your circumstances. This material may contain links to third party websites. Global X does not control and is not responsible for the information contained within third party websites. None of these links imply Global X’s support, endorsement or recommendation of any other company, product or service.
Global X Management (AUS) Limited ACN 150 433 828 AFSL No 466778
By subscribing to email updates you can expect thoroughly researched perspectives and market commentary on the trends shaping global markets. Topics may span disruptive tech, income strategies, and emerging economies.
Explore research, content or product pages within our site
Select Your Location
You Are Now Leaving the Australia Website of Global X ETFs
Clicking “Confirm” below will take you to a different website, intended for jurisdictions outside the US. Such links are provided as a convenience. Global X Management Company LLC disclaims responsibility for information, services or products found on the websites linked hereto.
The subsequent website(s) may be governed by different privacy policies, terms and conditions, or regulatory restrictions. Links to these websites are not intended for any person in any jurisdiction where – by reason of that person's nationality, residence or otherwise – the publication or availability of the website is prohibited. Persons in respect of whom such prohibitions apply should not access these websites.