Standard & Poor’s Launches Arithmetic Version of S&P Commodity Index

NEW YORK, May 23 /PRNewswire/ — Standard & Poor’s, the world’s leading provider of independent investment research, ratings and indices, announced today that it has launched an Arithmetic version of the S&P Commodity Index. The index is designed to measure price changes in a cross section of agricultural and industrial commodities with actively traded U.S. futures contracts — providing a true representation of consumed commodities that are put to industrial use.

“Commodity-linked investments, as part of an overall portfolio asset allocation, have gained acceptance in recent years as they are widely considered to be an excellent hedge against the risk of inflation,” says David Blitzer, Managing Director and Chairman of the Index Committee at Standard & Poor’s. “Standard & Poor’s new index will provide investors with an important benchmark for assessing returns on their commodity investments.”
The S&P Commodity Arithmetic Index (SPCI-A) will track commodities across five sectors – Energy, Metals, Grains, Livestock, and Fibers & Softs. Only commodities that are consumed for industrial use are included in the index. Since Gold is generally considered a financial, the sector will be excluded from the index.
Weighting within the index will based on the relative two-year average dollar value of the Commercial Open Interest (COI) for each of the component commodities, ensuring that a commodity’s share in the index is a function of the size of the underlying futures market. Speculative open interest, which can vary over time, is excluded. Weights are rebalanced annually each February.
In 2001, Standard & Poor’s launched the S&P Commodity Geometric Index (SPCI-G). The index, which is geometrically calculated, follows the same methodology and index construction as the newly launched Arithmetic index, but offers lower volatility.
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About Standard & Poor’s
Standard & Poor’s, a division of The McGraw-Hill Companies (NYSE: MHP), is the world’s foremost provider of independent credit ratings, indices, risk evaluation, investment research, data and valuations. With 6,000 employees located in 21 countries, Standard & Poor’s is an essential part of the world’s financial infrastructure and has played a leading role for more than 140 years in providing investors with the independent benchmarks they need to feel more confident about their investment and financial decisions.
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