Fortis Bank and IXIS Corporate & Investment Bank have launched a fund for institutional investors which will invest in emissions allowances. The instruments have already been traded by derivatives houses and energy companies (DW, 8/13), but the European Carbon Fund is the first vehicle to bring the fledgling asset class to institutional investors, according to Laurent Segalen, fund manager at IXIS CIB in Paris.
Segalen said the fund has approval to invest in all carbon instruments including options on emissions allowances, but its strategy will be long-only. With board approval, the fund may also invest in weather derivatives to enhance returns or smooth its risk profile, noted Segalen. Counterparties will be industrial and energy companies, he added.
The eight-year closed-ended fund will wrap at the end of March and has raised around EUR50 million (USD65 million) from institutional investors. It has a target size of EUR100 million. Fortis and IXIS will consider launching a second carbon fund in Q2, but with alterations such as a shorter tenure to attract hedge fund investment, according to Segalen. Fortis is a significant player in environmental markets and IXIS has experience managing a fund that finances environmental projects in France, so it made sense to team up, Segalen explained. Caisse des Dépôts, the French development agency, is also sponsoring the fund.