Going green has paid off in the credit crunch as the embryonic carbon trading market has outperformed against the volatile equity and bond markets.
Carbon credits are tradable schemes which are designed to reduce greenhouse gas emissions by giving them a monetary value. Individual countries, on the back of approval from the European Commission, give out these credits to companies.
Carbon credit trading is only one of three strategies to have delivered positive returns for hedge funds in August.
For instance, since mid-July the Intercontinental Exchange Commission 10 December Contract benchmark for carbon credit trading is up by around 10 percent. In comparison since July 18 the FTSE All Share is down 6.8 percent.
Vicki Bakhshi, associate director of governance and sustainables at F&C Investments, said the dwindling credit supply has caused carbon credit trading to succeed.
"The supply and demand in the carbon market help insulate the sector from the wider economy," she said....MORE