S&P will no longer license the Dow Jones-UBS Commodity Index. Instead, it will launch a competing index.
S&P Dow Jones is planning to launch a new commodities index now that its licensing deal with UBS for the Dow Jones-UBS Commodity Index and its family of subindexes will be history at the end of the month.
The new index will offer investors an alternative to the broadly used UBS-linked benchmark, currently underlying strategies like the $1.6 billion iPath Dow Jones-UBS Commodity Total Return ETN (DJP | A-18).
The planned Dow Jones Commodities Index will be an equal-weighted, broadly diversified commodity index, an S&P Dow Jones official told ETF.com. More specific details such as methodology and an actual launch date weren’t disclosed.
Under the existing agreement, the intellectual property underlying the Dow Jones-UBS commodities indexes belongs to UBS, and index licensing and data sales for the indexes are handled by S&P Dow Jones.
That partnership expires June 30, at which time Bloomberg is taking over the administration and distribution of the UBS-linked commodities indexes, and rebranding them as the “Bloomberg Commodity Index Family” as of July 1, an executive at Bloomberg Indexes told ETF.com. UBS retains intellectual property.
In an interview earlier this year, an executive at Bloomberg Indexes told ETF.com that the change shouldn’t impact ETF investors significantly because the lineup of existing UBS commodities indexes will remain intact except for a new name.
That said, the partnership could impact the commodities indexing segment over time, as Bloomberg uses its considerable marketing muscle to expand use among institutional and retail investors. Terms weren’t disclosed.
Under terms of the deal, the existing indexes will be renamed from “Dow Jones-UBS Commodity Index Family” to “Bloomberg Commodity Index Family” as of July 1.
Among the existing strategies that will undergo name changes:
- $1.6 billion iPath Dow Jones-UBS Commodity Total Return ETN (DJP | A-18). Barclays has a total of 19 ETNs that are linked to the Dow Jones-UBS benchmarks.
- UBS is behind strategies such as the Etracs DJ-UBS Commodity Total Return ETN (DJCI | B-48) that will undergo name changes.
- ProShares and iShares market strategies that use Dow Jones-UBS indexes, and their products, are likely to face name changes this summer as well.
“The only meaningful change will be the names of these benchmarks,” Srikant Dash, head of Bloomberg Indexes, told ETF.com. “The methodology, the rebalancing frequency, the costs, all of these other characteristics should remain the same.”
The partnership expands Bloomberg and UBS’ indexing collaboration, the companies say.
The two companies created the UBS Bloomberg Constant Maturity Commodity Index (CMCI) back in 2007, an index family that provides diversified commodity exposure across the full spectrum of the futures curve, the company noted in a press release.