In October, S&P Dow Jones Indices launched a family of indexes based on the S&P GSCI Single Commodity Index, applying its “capped component” rules to create a diversified, yet focused, family of commodity indexes.
The makeup of this new family of indexes provides market makers with the index they need to build an active portfolio that focuses on a single commodity, yet still offers the necessary diversity, according to Jodie Gunzberg, vice president of Commodity Indices at S&P Dow Jones Indices.
In each capped component index, the primary commodity holds 32 percent of the index, and the remaining 68 percent is evenly distributed among the other 23 commodities in the index.
The S&P GSCI includes a total of 24 commodities falling under 18 component designations. Components petroleum, wheat and cattle encompass multiple commodities.