On Jan. 5, Dow Jones & Co. and American International Group Inc. launched a new index of commodity prices in a joint marketing agreement. The Dow Jones-AIG Commodity Index is based on the futures contracts of 20 commodities, with the weightings of those components based first on liquidity and then on production data.
AIG officials said that method of assigning weights in the index sets the new index apart from its existing competition, the Bridge/CRB index and the Goldman Sachs Commodity Index of spot prices. The former includes 17 commodities and gives them all equal weight. The GSCI, which includes 22 commodities, gives heavier weights to commodities with greater world-wide production volumes, making it heavily petroleum weighted.
Adam De Chiara, managing director at AIG International, said he believes the DJ-AIG index improves on both approaches. "No single commodity or commodity group or sector dominates our index," he said. "The index should be something that investors can use to obtain broad commodity exposure."