Dow Jones to raise metals weightage in index

GLOBAL MARKETS

Dow Jones Indexes, provider of the second-most invested commodity index, will increase the weighting of metals in the measure next year.

Copper will account for 7 per cent of the Dow Jones-AIG Commodity Index, up from 6.2 per cent, the company said in a statement on August 3.

Aluminium will account for 7.1 per cent of the index in 2008, 0.3 percentage points more than this year, while zinc will make up 3 per cent, from 2.7 per cent.

About $38 billion is invested in funds and related products that track the Dow Jones-AIG Commodity Index, which is made up of 19 energy, metals, agriculture and livestock futures, Dow Jones said. Funds that track such indexes allow investors to replicate the gains and declines in the prices of a selection of commodities without owning them.

Crude oil, the index's largest component, will make up 13.1 per cent compared with 12.7 per cent this year. Gold will account for 7.4 per cent of the index, up from 6.8 per cent; silver will be 2.7 per cent, up from 2.2 per cent.

Live cattle, traded in Chicago, will make up 4.8 percent of the Dow Jones-AIG commodity index next year, down from 6.1 percent. Lean hogs will account for 2.5 percent of the index, down 0.5 percentage points.

About $110 billion was invested in funds and products tracking all commodity indexes at the end of the first quarter, up from $85 billion in the same period a year earlier, American International Group Inc. said on May 11. Investments may rise by between 15 and 20 percent annually in the next three years, the company said.

Goldman Index

The Standard & Poor's Goldman Sachs Commodity Index is the most used commodity index, with about $65 billion invested, AIG said.

The Dow Jones commodity index is calculated based on the number of commodity futures changing hands, or liquidity, as well as world production.

Futures are contracts for delivery of a security at a specified time in the future at an agreed price.

No single commodity makes up less than 2 percent or more than 15 percent of the index.

None of the energy, metals, agriculture and livestock industries can make up more than 33 percent of the index.