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Index Family Takes Different Angle On Commodities
By Journal of Indexes Staff

Commodities investor and fund manager (and the creator of his own family of widely followed commodities indexes) Jim Rogers has teamed with Van Eck Global to create a comprehensive global index series covering hard assets producers.

The Rogers Van Eck Hard Assets Producer Index family includes a headline index of more than 300 companies, in addition to a composite index that contains nearly 850 stocks. The series also includes an extra-liquid index with just 50 stocks and three sector indexes covering Agriculture, Energy and Metals. In all, the family includes the stocks of companies domiciled in 39 different countries, and the companies in the headline index have a combined market capitalization that represents 15% of the global total.

The goal of the index is to improve coverage of the natural resources and commodity-producing equity space. Van Eck says that current benchmarks either are not global in scope or are too heavily concentrated in Energy. The new index uses a hybrid weighting methodology that captures the global production value of the various commodities, rather than just the market capitalization, allowing areas like Agriculture to take a greater role in the index than they would in a straight market-cap product.

The series includes not just producers, but also companies that provide vital products and services to those producers. In another interesting tweak, the index also includes an “alternatives” category that covers companies such as water utilities and companies involved in the production of energy from alternative resources like the sun or the wind. These are not usually associated with natural resources indexes, but Van Eck says that the market is changing.

The other five sectors covered by the index are Agriculture, Base/Industrial Metals, Energy, Forest Products and Precious Metals.

Components must derive at least 50% of their revenues from their operations in the commodity sector they fall into; however, that requirement is waived (to 25%) for companies operating in the Water sector.

Van Eck has a hard assets producers ETF in registration that will track an unspecified index—probably the headline Rogers Van Eck Hard Assets Producers Index.
 

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