Commodity Insights

S&P DJI, Columbia Threadneedle, and Energy Aspects discuss supply/demand dynamics and how commodities – including oil, energy, gold, and softs – are responding to the macro and geopolitical factors in the current climate.
Given recent volatility in oil prices, it’s important to understand how price shifts may affect other commodities. What happens to other commodities when oil prices spike?
What makes the Dow Jones Commodity Index tick? Jodie Gunzberg, Global Head of Commodities at S&P DJI, discusses the key elements involved in the construction of the DJCI.
Equal weights across sectors and transparency are two of the factors driving the DJCI. Watch as Jodie Gunzberg explains how the DJCI addresses a market need.
Diversification
Inflation Protection
Liquidity
Pure Beta

Diversification

Historically, commodities have had low correlations to stocks and bonds since the sources of return are inherently different. Because commodities are necessary, often-used staple goods, they can also provide diversification during economic crises.

Inflation Protection

Commodity indices tend to have a positive correlation to inflation because they reflect our changing expectations of future prices.  Historically, one dollar of investment in broad-based commodity indices has provided more than one dollar of inflation protection, since food and energy have more weight in the index than in the CPI.

Liquidity

The weight of each commodity in the S&P GSCI® is based on the volume of futures contracts traded on that commodity, allowing the index to be investable. As a result, the index has relatively higher weights in crude oil, natural gas and heating oil – some of the most heavily traded commodities in the world. The Dow Jones Commodity Index employs a simple, straightforward, equal-weighted approach, so that one-third of the index is devoted to agriculture and livestock, one-third to energy and one-third to metals.

Pure Beta

S&P GSCI and Dow Jones Commodity Index can be considered a true reflection of commodity beta. Just as the S&P 500’s® market capitalization weighting scheme mirrors the stock market, S&P GSCI® uses a production weighting scheme to tap into how the world views the general commodity landscape.  The Dow Jones Commodity Index was designed with equally weighted sectors and liquidity-weighted commodities to facilitate the index’s use as a well-diversified core beta index and as a building block for modified indices.  Sources of return may be captured with modified indices like the DJCI and S&P WCI.

Dig deeper into the economic effects and potential opportunities surrounding recent drops in oil.
Over the summer, S&P DJI introduced the Dow Jones Commodity Index, an alternative to the former DJ-UBS Commodity Index. Find out the distinguishing characteristics between the two indices that can make a big difference.
Get answers on topics ranging from the roll schedule to the rationale behind the index.
Read the press release to find out what makes this index unique.
The world economy—and commodities—may be entering a new paradigm driven by expansion of demand. The S&P GSCI Dynamic Roll was designed to identify return opportunities in this space. Find out how it compares to traditional modified roll indices.
Can we apply alternate beta strategy principles to commodities? Find out in our latest commodities paper.
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