Two Flagship Benchmarks Delivering Pure Beta

Historical Benefits of Commodities

  • Diversification

    Historically, commodities have had low correlations to stocks and bonds because the sources of return are inherently different. Because commodities are necessary, often-used staple goods, they can also provide diversification during economic crises.

  • Inflation Protection

    Inflation Protection
    Commodity indices tend to have a positive correlation to inflation because they reflect our changing expectations of future prices. Historically, one dollar of investment in a broad-based commodity index has provided more than one dollar of inflation protection, because food and energy carry more weight in these indices than in the CPI.

  • Liquidity

    To promote investability, the weight of each commodity in the S&P GSCI® is based on its volume of futures contracts traded. As a result, the index tends to have higher weights in crude oil, natural gas, and heating oil. The DJCI employs a simple, straightforward, equal-weighted approach, so that one-third of the index is devoted to agriculture and livestock, one-third to energy, and one-third to metals.