DWS Investments, the mutual fund management business of Germany’s Deutsche Bank, has launched a ‘public’ carbon fund open to European retail and institutional investors.
The DWS CO2 Opportunities Fund will invest in a range of credits, derivatives, structured products and certificates that have exposure to the market for carbon dioxide permits, mainly EU allowances (EUAs) and certified emission reductions (CERs).
Distributing the investment between different products minimises credit and market risks, according to Markus Huewener, chief executive officer of First Climate, a Bad Vilbel-based firm specialising in carbon trading and investment management, which is advising the fund’s manager, Hamburg-based asset manager Aquila Capital.
Huewener said a portion of the fund will be “managed” investments in, for example, spreads between calendar years and between EUA and CER prices. The proportion being invested in the managed segment will vary, he said.
DWS initiated the fund and will act as distributor. The fund, for which there is no minimum investment, is available from high street banks and via other fund companies. Huewener said investors in the fund will find “liquidity to get in and out every day. We take a lot of risk management [measures] in the fund to provide this liquidity”.
On 23 September, the fund had €3.14 million ($4.63 million) invested in it. A spokeswoman for Aquila said there was no target size for the fund, but the size of the carbon market would allow it to reach €250 million.
DWS said the fund is intended for “the risk-tolerant investor who, in seeking investments that offer targeted opportunities to maximise return, can tolerate the unavoidable, and occasionally substantial, fluctuations in the values of speculative investments.”
