The global carbon markets have grown exponentially since emissions trading in the EU commenced in 2005, creating a range of opportunities for funds to participate in this sector. Whilst the carbon markets are volatile, the volatility can create opportunities for firms that have a highly skilled investment team and a robust risk management framework to construct strategies that do well with a fluctuating market.
The firm recently launched the World Carbon Fund, a globally diversified fund investing in multiple liquid and regulated carbon markets. The fund pursues an absolute return strategy, seeking to deliver positive returns with a low correlation to traditional and alternative asset classes. It also seeks to have a direct positive impact on climate change. To support the growth of its fund, Carbon Cap has replaced their existing core risk software with a more sophisticated solution. Quantifi was selected because of its support for emissions as an asset class, combined with advanced risk functionality including calculating sensitivities, scenarios, what-if-analysis, and HVaR for internal and external risk reporting.
“With our fund expanding we recognised that our current system was not sufficient to support all of our emissions trading strategies. When looking for a replacement solution, Quantifi stood out with its expertise in financial and commodities modelling,” comments Michael Azlen, Founder and CEO, Carbon Cap Management. “We now have a core risk solution that provides the level of sophistication, flexibility and transparency we require to ensure compliance with our fund strategy and investor requirements. We now have a solution that gives us a firm foundation for growth,” continues Michael.
“We are pleased to bring Quantifi’s sophisticated risk capabilities to Carbon Cap to help them better navigate the volatility associated with carbon markets,” comments Rohan Douglas, CEO, Quantifi. “Carbon Cap has launched a fund specific to their unique core competencies and we are excited with the opportunity to help them establish a leadership position in the environmental investment industry,” continue Rohan.
Quantifi is a provider of risk, analytics and trading solutions. Its award-winning suite of integrated pre- and post-trade solutions allow market participants to better value, trade and risk manage their exposures and respond more effectively to changing market conditions.
Founded in 2002, Quantifi is trusted by the world’s most sophisticated financial institutions, including five of the six largest global banks, two of the three largest asset managers, leading hedge funds, insurance companies, pension funds and other institutions across 40 countries.
Carbon Cap Management, a London based environmental asset management firm. Carbon Cap’s mission is to raise awareness about climate change and to provide solutions directly related to the capping and reduction of carbon dioxide emissions. Carbon Cap manages the World Carbon Fund, a climate change impact fund that invests globally into liquid and regulated carbon markets targeting absolute returns, controlled risk and a direct impact on climate change.