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BCGI Overview |
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The Bache Commodity Green IndexSM (BCGISM) comprises two main parts:
The index’s initial allocation is 60% to the BBC and 40% to the BCAC. The BBC consists of sustainable agricultural products that can be utilized as fuel. The BCAC holds commodities that are directly related to reducing the effects of climate change. These include carbon emission credits and certain metals that are critical components in products such as catalytic converters that reduce emissions of greenhouse gases such as nitrous oxide. The BCGISM is currently composed of 11 commodities that are traded on major exchanges and through over-the-counter markets located in the United States, Canada, UK, France, and Malaysia. The BCGISM is primarily comprised of commodities traded via futures contracts, but includes commodities traded over-the-counter directly or through forward contracts. The primary objective of the BCGISM is to provide a multi-faceted approach to holding commodities needed in the production of sustainable energy and the reduction of carbon emission. There are additional objectives of the BCGISM. The first of these is to provide broad, long-term diversified exposure to individual commodities within the biofuel and clean environment sectors. These commodities are selected based on their overall importance to that sector as well as their market liquidity. The second objective is to ensure that the BCGISM does not become dominated by a single commodity sector or by several commodities within a commodity sector. The third objective is to moderate the volatility inherent in the major commodity markets. This is accomplished through utilizing the Bache Commodity IndexSM (BCISM) methodology, a systematic quantitative risk reduction technique based on the commodity price momentum. |
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