Munich Re launches product leveraging EU’s ETS Carbon Market

Major European institution Munich Re Investment Partners is breaking new ground with the launch of an investment product focused on the European Union’s Mandatory ETS Carbon Market.

The product, based on investing in EU Emissions Allowances (EUAs) is being pitched to Australian institutional investors in the form of the major superannuation funds, with Munich Re Investment Partner’s Head of Investment Research and Product, Steffen Horter describing it as “an emerging asset class with very attractive features”.

The new Munich Re Investment Partners European Union Allowances (EUA) Strategy fund (the EUA Strategy fund) enables institutional investors direct access to the largest regulated carbon cap-and-trade market globally – the EU Emissions Trading Scheme (EU ETS). In 2022, the trade volume of globally regulated emission rights rose to a record of about 1.4 trillion AUD – 87% of this volume had been traded through the EU ETS.

Outlining the new product in Sydney, Horter acknowledged that it value was predicated in large part on the mandatory nature of the EU’s ETS carbon market and the reality that it had given rise to an asset that had out-performed all other asset classes.

Put simply, he said that EUAs were one of the best performing commodities in recent years out-performing major asset classes on one, three and 10-year horizons whilst exhibiting low correlations.

According to Munich Re Investment Partners the product will contribute to reduced ETS Carbon Allowance Supply.

Munich Re Investment Partners is the climate-focused specialist boutique asset manager wholly owned by Munich Re which has established a branch in Sydney focused on the Australian institutional market.