Alternative Investments/ESG: TD Asset Management Debuts Carbon Credit ESG ETF
The new ETF from TD Asset Management offers access to the global carbon credit marketplace.
The TD Global Carbon Credit Index ETF (TCBN) launched by TD Asset Management offers investors the opportunity to participate in the returns from investments in global ‘cap-and-trade’ carbon emission credits, as measured by the Solactive Global Carbon Credit CAD Hedged Index. (Seeking Alpha)
Under this system, government authorities place a ‘cap’ on the amount of carbon emissions allowable by an industry, with this amount declining year after year. However, companies can manage excess emissions through a ‘trade’ of carbon credits in their marketplace.
TD Global Carbon Credit Index ETF (TCBN)
The ETF has an expense ratio of just 0.65%. It is a useful alternative investment that diversifies out of the [60:40] bonds/equity allocation because carbon credits have exhibited a historically low correlation to traditional asset classes.
Furthermore, it offers an opportunity to participate in the global transition to clean energy – more so because the carbon credit market has seen massive growth in both trading volumes and carbon prices, and is expected to maintain above-average, long-term growth.
Bruce Cooper, Chief Executive Officer, TD Asset Management and Senior Vice President, TD Bank Group stated: “Governments across the globe have adopted the practice of pricing greenhouse gas emissions to tackle climate change. With this in mind, carbon credits have emerged as an important alternative asset class by putting a price on carbon and creating a market in which companies can trade emissions permits.”
He added: “In addition to participating in the transition from fossil fuels to more sustainable energy sources, we expect positive returns from the carbon credit market as well as added diversification benefits within a portfolio.”
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