S&P Dow Jones announces launch of Dow Jones RAFI Commodity index

By Tali Rackner

Norfolk, Va., Sept. 11 – S&P Dow Jones Indices announced the launch of the Dow Jones RAFI Commodity index, according to a press release.

The index offers a factor-based approach that uses signals intended to generate outperformance, but with typical indexing merits like liquidity, governance and transparency.

The methodology, developed jointly by S&P Dow Jones and research affiliates, uses momentum and roll yield to over (under)-weight commodities within the equally weighted sectors of the Dow Jones Commodity Index, the release said.

Currently, the RAFI Commodity Index contains 23 commodities across three major sectors including energy, agriculture and livestock and metals. The reconstitution of the index occurs annually during the January Roll.

“The Dow Jones RAFI Commodity index intends to provide investors the potential to achieve alpha-like returns within an index strategy by weighting according to fundamental factors in commodities,” global head of commodities Jodie Gunzberg said in the release.

“The index is designed to serve as the basis for potential investment products, such as ETFs, which may offer a liquid and transparent means for investors to gain exposure to current drivers of commodity returns.”

S&P Dow Jones is part of New York-based McGraw-Hill Cos., a resource for index-based concepts, data and research.

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