These frequently used commodity indexes offer investors varying types of exposure to the asset class, which can impact both risk and returns. Understanding how they differ is key.
What this chart shows
The S&P GSCI Total Return and Credit Suisse indexes do not place constraints on underlying sector allocations, which can lead to higher concentration in individual commodities. Another key difference: Bloomberg and Credit Suisse rebalance regularly, while the S&P GSCI does not.
What it means for investors
Differences in how the indexes are weighted and rebalanced can cause them to perform quite differently. Those that rebalance regularly and have sector allocation constraints are less prone to over concentration, which can result in a more diversified exposure to commodities.
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