Commodity indexes

Commodity Indices

Indices that track the price of different types of commodities. A commodity index may track commodities directly, or indirectly by tracking futures contracts for certain commodities. For example, commodity indices may track energy products or currencies, or may tracks futures contracts in either of those. Commodity indices operate much like exchange-traded funds or mutual funds in day-to-day trading: investors may buy, sell, or short sell shares in commodity indices as if they were stocks. An advantage to trading commodity indices is that it gives investors access to commodity markets without needing to buy or accept delivery on the underlying commodities.

Commodity indexes.

A commodity index tracks the performance of specific bulk goods or raw materials. Commodity indexes may measure the price of a physical basket of commodities, but many indexes are based on the prices of futures contracts currently trading on an organized commodity market.

The value of a commodity index fluctuates based on the performance of its underlying products or instruments, such as agricultural products, precious metals or currencies. Different indexes have various ways of categorizing commodities, and some indexes are weighted so that the most valuable materials have the greatest impact.

Individual and institutional investors can purchase shares in commodity funds that seek to replicate the performance of specific commodity indexes, just as they can purchase index funds and ETFs that track securities indexes.

A primary attraction of commodity funds is that they enable investors to enter the commodities market without directly purchasing physical commodities or futures contracts.

References in periodicals archive ?
SummerHaven Index Management, LLC creates innovative commodity indexes focused on providing investors with better risk-adjusted returns than traditional commodity indexes.
Amid the drama of Iran, the meltdown of refiner Petroplus and a wave of upbeat economic data, it was all too easy to overlook one of the most important short-term factors shaping oil markets: the reweighting of the world's biggest commodity indexes.
Dow Jones-AIG Commodity Indexes have been renamed Dow Jones-UBS Commodity Indexes.
Our clients now have a wide variety of choices in accessing commodity indexes.
Like stock indexes, commodity indexes track the composite price of a basket of long futures positions in physical commodities.
Jim Rogers originated and began publishing the RICI(R) family of commodity indexes in 1998 at the end of the commodity bear market.
The returns of commodity indexes come from three major sources: spot returns, rebalancing returns and interest yield on collateral.
LONDON -- RIMES, a leader in benchmark data management, has added NASDAQ OMX's families of commodity indexes to RIMES BDS([R]), its award-winning Benchmark Data Service.
The investor presence in futures markets is most obvious in the S&P GSCI, the biggest of the commodity indexes.
Traditional commodity indexes tend to weight 100% to the nearest-to-maturity contract without consideration of changing market dynamics.
DBC, the original commodity ETF designed with a rules-based index methodology, helps investors minimize the effects of negative roll yield that can be experienced with conventional commodity indexes.

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