Kepos Capital is planning to launch a third hedge fund with an investment strategy focused on climate change, according to a report by Bloomberg.

Kepos Capital is planning to launch a third hedge fund with an investment strategy focused on climate change, according to a report by Bloomberg.

The report cites a unnamed source as revealing that the new Carbon Evolution Fund, which will be managed by Mark Carhart and his Kepos Capital co-founder Bob Litterman, will trade a range of securities including California Carbon Allowances and derivatives tied to the Regional Greenhouse Gas Initiative and European Union Allowances for emissions. 

Litterman, has acted as and adviser to the US government on climate risks and is chairman of the Commodity Futures Trading Commission’s climate-related market risk subcommittee. Carhart meanwhile, was previously the head of Goldman Sachs Group Inc’s biggest hedge fund, but left in 2009 to open Kepos the following year with Litterman and Giorgio De Santis.

Kepos' original climate change-focused fund generated a 23% gain in 2021, while its second fund, which was launched last year and trads carbon allowances, gained 26% in 2021 and 5% in the first six months of this year.