INVESTMENT NEWS: Salt to list carbon credit fund

October 14, 2018

The Auckland-based Salt Funds Management is to launch a unique NZX-listed product targeting the carbon credits market.

In a cache of documents filed last week, Salt says the new Carbon Fund will “buy and sell carbon credits on emission trading schemes, or hold cash based on our own analysis and assessment of the market”.

Initially to invest in carbon credits issued under the NZ emissions trading schemes (ETS), the new Salt fund can also buy similar assets offshore such as in the European Union (EU), which houses the world’s largest market of the kind.

“Salt may invest in other offshore schemes other than the EU ETS in the future if it considers the scheme is sufficiently established and provides a robust investment opportunity to the Fund,” the offer document says. The fund can also allocate to other unit trusts listed on the NZX or ASX that invest in carbon markets or relevant derivatives.

The manager would consider a range of factors including technology, politics, regulation, fuel prices, weather and climate change in pricing carbon credits. However, Salt says the carbon fund has no “appropriate” broad-based benchmark to gauge performance against.

“This Fund is the first fund, listed or unlisted, to invest in carbon credits in New Zealand. Therefore, there is no peer group index for carbon credits in NZ,” the offer document says. “Nor do we believe there is an appropriate peer group index that is useful in assessing the performance of the Fund. The price of carbon credits on the NZ ETS has a correlation to other major asset classes of close to zero.”

The carbon product will be structured as a portfolio investment entity (PIE) – listed on the NZX – with MMC to provide unit-pricing and registry outsourced to Link. Guardian Trust is both supervisor and custodian.

Salt will open up the carbon fund for initial offers over October 23 to November 5 before officially listing on the NZX Main Board on November 8.

Headed by Matthew Goodson and Paul Harrison, Salt may roll out other listed funds under the master trust deed housing the carbon fund. The Australasian shares manager looks after about $2 billion on behalf of retail and institutional investors including marquee clients Westpac/BT and AMP Capital.

Michelle Johnson