Dow Jones and AIG launch commodity forward indexes

The new indexes, the DJ-AIG Commodity Index 1 Month Forward, the DJ-AIG Commodity Index 2 Month forward and the DJ-AIG Commodity Index 3 Month Forward, will allow investors to measure exposure to longer-dated commodity futures contracts.

“As the market becomes more sophisticated, investors are becoming more willing to use contracts further out along the curve, if they feel that that part of the curve is more advantageous,” said Dan Raab, managing director of AIG Financial Products.

Michael Petronella, president at Dow Jones Indexes/Ventures, said: “We want to be responsive to commodity index investors’ needs now that commodities have gained acceptance as a mainstream asset class. As forward commodity futures markets have become more liquid, we feel it is important to develop new indexes for investors seeking to take advantage of the different return characteristics of longer-dated commodity futures.”

The Dow Jones-AIG Commodity Index, a diversified benchmark for the commodities markets, is up 7.81% so far this year. The index is composed of futures contracts on physical commodities including aluminium, cattle, coffee, copper, corn, cotton, crude oil, gold, heating oil, hogs, natural gas, nickel, silver, soybeans, soybean oil, sugar, unleaded gas, wheat and zinc.