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Commodity ETFs: Know Your Indices

Posted on 25 August 2014

In May, BNP Paribas changed the benchmark of its broad-basket commodity ETF, namely the S&P GSCI Capped Component 35/20 THEAM Easy ETF, for the sole purpose of complying with ESMA diversification guidelines. The replacement index applies caps on a ‘component’ rather than a ‘commodity’ level, effectively reducing the index’s exposure to the energy sector.
This occurs because an index component such as oil, may include more than one, highly-correlated individual commodity such as Brent Crude, WTI Crude or Gasoil. Therefore a cap at component level restricts the combined weight, rather than individual weights, of commodities………………………………………..Full Article: Source


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VRS - who has written 40596 posts on Opalesque Commodities Briefing.


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