From Platts' The Barrel blog:
S&P Dow Jones launches a new commodity index
Our colleagues at S&P Dow Jones Indices — like Platts, a unit of McGraw Hill Financial — have launched a new commodity index. Investing in commodities through indexes do or do not have a significant impact on price; we cite both sides of the coin to note that it is an issue of significant disagreeement among analysis.
Platts wrote about the launch in this news story on July 1, the day the index was launched. We are republishing here a blog posting from S&P’s blog Indexology, written by Jodie Gunzberg, global head of commodities for S&P Dow Jones Indices. We have featured Jodie’s views on The Barrel previously.———————————
There could be no more symbolic time than just before the July 4th holiday for S&P Dow Jones Indices (S&P DJI) to announce the Dow Jones Commodity Index (DJCI), an alternative to the former DJ-UBS. This is the first ever commodity index under the Dow Jones brand to be fully free from conflicts of interest, plus it highlights diversification and liquidity as its intrinsic characteristics.
Please see the table below summarizing the key differences between the DJCI and former DJ-UBS:
Source: S&P Down Jones Indices
What is most important about the table above? The commodity selection. Nothing is more important about a commodity index than what commodities get included.*The GSCI is now owned by S&P.
The DJCI is run by S&P DJI with nearly two decades of proven commodity indexing experience built upon transparent decision making, strong governance, and critical quality controls. This experience is poured into the DJCI; including commodity selection based on the rules written in the methodology that mirror the time-tested rules of theS&P GSCI methodology.
The DJCI is governed by the Commodity Index Committee at S&P DJI made from members, each with several years of experience in financial markets, appointed from the Index Management and Production Group (IMPG) of S&P DJI. IMPG personnel are prohibited from trading any securities or constituents which are, or may be, included in any index that they have oversight or management responsibilities for. Further, all IMPG personnel do not have any commercial responsibilities that might result in the appearance of a conflict of interest.
As an independent index provider, S&P DJI ensures a strict separation between commercial operations and the index or benchmark calculation function. The potential for conflicts naturally arises when an organization is involved in index publication as well as in pricing component securities and/or issuing investment products....MORE
Goldman Sachs does God's work and should not be disparaged.
John Prestbo, executive director of Dow Jones Indexes won the Sharpe Indexing Lifetime Achievement Award at the 12th annual Superbowl of Indexing (who knew?)
