2018 target weights announced for Bloomberg Commodity Index

Oct 25th, 2017 | By | Category: Commodities

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Bloomberg has announced the 2018 target weights and composition of the Bloomberg Commodity Index (BCOM), a well-known benchmark for the performance of the broad commodities universe. The rebalancing, effective January 2018, is set to affect several large ETFs that track the flagship index.

2018 target weights announced for Bloomberg Commodity Index

The Bloomberg Commodity Index provides exposure to over 20 different commodities.

The index, denominated in US dollars, is well diversified and contains components in the energy, grains, industrial metals, precious metals, softs and livestock sectors. Commodities are weighted two-thirds by liquidity and one-third by global production with caps (max 15%) and floors (min 2%) to the exposure of any one commodity in the index, resulting in a more balanced index weighting.

Additionally, no single commodity, together with its derivatives, may constitute more than 25% of BCOM (e.g., WTI Crude Oil and Brent Crude Oil, together with ULS diesel and RBOB Gas). No group may constitute more than 33% of BCOM (e.g., Precious Metals)

No new commodities will be added or removed as a result of the annual reconstitution.

Energy will remain the largest group in BCOM in 2018, despite reaching its lowest weight in 17 years at 30.34%. The rebalancing will see marginal weight increases in the industrial metals, precious metals, softs and livestock groups.

Gold will remain the highest weighted constituent, increasing in weight to 12%. The commodity with the largest weight reduction is corn, decreasing over 1.2 percentage points.

Invesco PowerShares provides the largest ETF in Europe to track the Bloomberg Commodity Index – the Source Bloomberg Commodity UCITS ETF (LON: CMOD). The fund has over $500m in assets under management and has a total cost of 0.40% per annum (ongoing charges of 0.19% and swap fee of 0.21%).

Other ETFs to track the index include funds provided by UBS and ETF Securities. The ETFS All Commodities GO UCITS ETF (LON: AIGC) trades in USD and has a total cost of 0.49%. The UBS Bloomberg Commodity UCITS ETF (Six Swiss: DCUSAS) has a total cost of 0.37%. The fund trades in USD, GBP, CHF or EUR.

Target weights of all BCOM components for 2018, as well as their comparative weights in 2017, are listed below:

Source: Bloomberg.

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