Index invasion

Commodity Indexes

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Not so long ago, if an institutional investor wanted broad exposure to the commodity markets, it could either divide its money between a selection of exchange-traded futures contracts - being careful to close out the contracts before taking physical delivery of the assets - or simply invest the whole lot in one of a handful of commodity indexes. The indexes did more or less the same thing: the cash was invested in the front-month futures contracts of the underlying commodities and, as the con