What is a commodity index?

What is a commodity index?

Commodity indexes are also called commodity price indexes, and they are informational services which reflect the price action in a designated commodity or basket of commodities.

Indexes are often tracked by mutual funds or ETFs, and these can be confused with the actual index. Indexes are computed and published by market research firms.

They can serve as benchmarks against which the performance of a specific asset or an investment portfolio can be compared, or they can serve as the model that index funds seek to emulate.

Commodities indexes can focus on one specific kind of commodity or any size basket of various commodities. There are over 40 types of major commodities traded throughout the world. An index appears as a line on a graph, with time on the x-axis and price/index value on the y-axis.

The Goldman-Sachs Commodity Index (GSCI) has been a major index for global commodities in aggregate.

What is Index Investing?
What is the House Price Index (HPI)?