This book illustrates strategies of funds investing into project-based emission reduction credits that are sold to compliance buyers under cap-and-trade schemes. The question is how carbon funds are going to place future investments in order to gain competitive advantage and superior performance. Recent developments in emission reduction project finance and credits portfolio management are analyzed. This leads to hypotheses on future investment strategies of funds operating under the Clean Development Mechanism (CDM). Irrespective of their strategies, well-positioned carbon funds are perceived to seize considerable upscale and opportunities in an emerging market. However, as this book reveals, funds are exposed to high carbon asset quantity and price risks. This is further aggravated since carbon asset development requires long-term investments. Moreover, technology-, country- and regulatory risks impose high uncertainty on both supply- and demand side. Hence, it is of crucial importance for carbon funds to assess, diversify and mitigate these risks while looking at feasible investment opportunities.