The World Carbon Fund (WCF) closed 2024 with a net return of +6.22%, surpassing compliance carbon markets for the fifth consecutive year, according to its latest investment update.
This consistent outperformance comes as four out of the five compliance markets tracked by the WCF ended the year in negative territory. Founded in 2020, the WCF manages $520 million in assets and invests in major carbon markets, including the EU Emissions Trading Scheme (ETS), UK ETS, California’s CCA, RGGI in the U.S., and New Zealand ETS.
Although 2024 marked the WCF's lowest annual return since its launch, it continued to deliver positive gains, building on past successes. Previous annual returns ranged from +8.96% in 2022 to an impressive +52.6% in 2021. December saw a slight improvement, with a gain of +0.68%, up from November's +0.27% but lower than the +3.31% recorded in December 2023.
Volatility defined the markets throughout December, with mixed pricing trends across regions. The EU ETS rebounded with a +3.5% increase, while the UK ETS fell by -6.7%, impacted by strong wind energy output and weak market sentiment. California’s CCA market remained mostly flat but volatile due to program uncertainties and an 8% drop in road transport emissions year-on-year.
RGGI emerged as the strongest performer in December, climbing over +6%, while New Zealand ETS prices ended the month slightly lower, dipping -0.5% following partial auction clearances.
The WCF’s December gains were largely driven by its Core Strategy, which leverages tactical long-biased investments and an options overlay, yielding +0.68% gross. Additionally, its Alpha Strategies, focusing on arbitrage and short-term trading, delivered +0.27% gross.
Despite market volatility, the WCF has reaffirmed its position as a resilient and effective player in the carbon markets, showcasing strong management and adaptive strategies.