Never miss a story — sign up for PLANADVISER newsletters to keep up on the latest retirement plan adviser news.
Products May 27, 2008
S&P Launches Commodities, Natural Resources Indices
Commodities markets have been thriving of lateâ€″and investors have a new way to benchmark those investments.
Reported by Nevin E. Adams
Standard & Poor’s launched two new indices aimed at providing investors with benchmark and investable exposure to the commodities and natural resources sectors.
According to a press release, the S&P Global Natural Resources Index is designed to provide diversified, highly liquid, and investable exposure across the primary commodity sectors of energy, agribusiness and metals and mining. Each of these sectors has two clusters: energy (oil, coal and gas), agribusiness (agriculture and livestock) and metals and mining (precious and industrial). The index offers focused coverage of the 60 largest companies across these six clusters, and is designed primarily for structured product providers and ETFs.
The S&P PMI Commodities and Resources Index is designed to provide a broader coverage of larger capitalized stocks from commodities and resources (energy, agribusiness and metals and mining), with approximately 160 stocks suitable for benchmarking for performance measurement, data for research, or passive management, including funds and ETFs.
Natural Resources
According to the release, the S&P Global Natural Resources Index sits within S&P’s family of Global Thematic Indices. It uses a modified cap weighting at the constituent level subject to stock level constraints (10% cap per stock). To ensure investability, a minimum market capitalization of US$1 billion and a minimum six month average daily value traded of $10 million is required. The three sectors, six clusters, and 10 stocks per cluster are not capped, so the index weighting is bottom-up driven.
The S&P PMI Commodity and Resources Index measures the performance of constituents that fall into three different natural resources buckets: energy, materials, and agriculture. Each bucket is capped at 33.33% to ensure that one bucket will not dominate the index. The index is a subset of the S&P/Citigroup BMI Global Equity Indices.
One-year returns, at April 30, were 35.27% for the S&P Global Natural Resources Index and 51.92% for the S&P PMI Commodity and Resources Index, according to S&P.
More information is available at http://www.standardandpoors.com/indices.