DEFINITION of 'S&P GSCI '

The S&P GSCI is a composite index of commodity sector returns which represents a broadly diversified, unleveraged, long-only position in commodity futures. The S&P GSCI is intended to provide exposure to broad-based commodities. The S&P GSCI was previously known as the Goldman Sachs Commodity Index (GSCI) but was purchased by Standard & Poor’s from Goldman Sachs in 2007.

BREAKING DOWN 'S&P GSCI '

The S&P GSCI is made up of 24 exchange-traded futures contracts that cover physical commodities spanning five sectors. The sectors in the 2018 composition are energy, industrial metals, precious metals, agriculture and livestock. This sector mix has been consistent over the years, but the weighting shifts year to year.

S&P GSCI Methodology and Composition

The methodology of the S&P GSCI was left unchanged when Standard and Poor’s took over the index. The index's components qualify for inclusion in the index based on liquidity measures and are weighted in relation to their global production levels - a characteristic which helps make the GSCI valuable as both an economic indicator and a commodities market benchmark. Below is a table of the 2018 reference percentage dollar weights (RPDW) for the S&P GSCI.

Commodity

2018 RPDW

Chicago Wheat

3.03%

Kansas Wheat

1.12%

Corn

4.98%

Soybeans

3.66%

Coffee

1.01%

Sugar

2.49%

Cocoa

0.36%

Cotton

1.59%

Live Cattle

2.22%

Feeder Cattle

4.06%

Lean Hogs

1.25%

WTI Crude Oil

24.70%

Brent Crude Oil

3.88%

Gas Oil

4.58%

Heating Oil

16.89%

RBOB Gasoline

4.63%

Natural Gas

3.90%

Aluminum

3.63%

LME Copper

4.43%

Lead

0.68%

Nickel

0.87%

Zinc

1.30%

Gold

4.21%

Silver

0.52%

By sector, energy makes up 58.5% of the average, with agriculture next at 18.25%, livestock at 7.53%, Industrial metals at 10.91% and precious metals at 4.73%. This mix is re-evaluated and rebalanced on an annual basis. For example, energy commodities increased their share of the index by 2.4% over 2017.

Investing in the S&P GSCI and Similar Indices

The S&P GSCI is designed to be investable and there are ETF products designed to track its performance. The S&P GSCI captures global inflation of core commodities, making it ideal for funds to track in order to create products that have low correlations with traditional asset classes. Other widely watched and traded commodity indexes include the Credit Suisse Commodity Benchmark Index and the Bloomberg Commodity Total Return Index. It is important to understand how these indexes are weighted and the frequency of rebalancing as these differences will affect the performance of tracking products differently over time.

RELATED TERMS
  1. Commodity Index

    A commodity index is an investment vehicle that tracks a basket ...
  2. Commodity ETF

    A commodity ETF is an exchange-traded fund that invests in physical ...
  3. Soft Commodity

    A soft commodity is a grown commodity such as coffee, cocoa, ...
  4. Commodity Price Risk

    Commodity price risk is price uncertainty that adversely impacts ...
  5. Excluded Commodity

    An excluded commodity cannot be manipulated because it is beyond ...
  6. Standard & Poor's - S&P

    Standard & Poor's (S&P) is a major index provider and source ...
Related Articles
  1. Investing

    ETF/ETN Analysis: iPath S&P GSCI Crude Oil

    Learn about iPath S&P GSCI Crude Oil exchange-traded notes and how investors can use this ETN to profit from short to intermediate changes in oil prices.
  2. Investing

    (USO, OIL, UWTI) 3 Bond ETFs in the Oil Sector

    Find out more about exchange-traded funds (ETFs) that track the oil sector, such as the United States Oil Fund and the iPath S&P GSCI Crude Oil TR ETN.
  3. Investing

    A New Commodities ETF Breaks With Tradition

    This new commodity ETF offers a unique spin on investing in this asset class.
  4. Trading

    Will the Downtrend in Commodities Will Continue? (DBC)

    Major resistance levels on the charts of these agriculture ETFs suggest that the bulls may want to wait it out on the sidelines for better days. (DBC,OIL,WEAT)
  5. Trading

    3 Reasons to Be Bullish on Commodities in 2018

    Bullish long-term chart patterns on key commodity-related ETFs suggest that a major uptrend is just getting started.
  6. Investing

    Commodities trading: An overview

    Trading commodities can seem challenging to a novice trader but we break it down for you. Learn more about the history of commodities, the types of commodities, and how to invest in them.
  7. Investing

    Watch Out for Agricultural Stocks

    All eyes are on metals and energy. Based on the charts in this article, now could be the time to watch out for agriculture stocks.
  8. Investing

    DBC: PowerShares DB Commodity Tracking ETF

    Find out about the PowerShares DB Commodity Tracking ETF, and explore a detailed analysis of the fund that tracks 14 distinct commodities using futures contracts.
  9. Investing

    10 Most Traded Oil ETFs

    Discover detailed analyses of the most traded oil-related exchange-traded products, and learn about the characteristics of these ETFs and ETNs.
  10. Investing

    Top 3 Natural Gas ETFs for 2018

    The three most actively traded natural gas ETFs for 2018.
RELATED FAQS
  1. Why do investors use the S&P 500 as a benchmark?

    Learn about the advantages and disadvantages of using the S&P 500 as a benchmark for portfolio performance, and understand ... Read Answer >>
  2. What is the history of the S&P 500?

    Discover the history of the S&P 500, which sophisticated market participants consider to be the best index to understand ... Read Answer >>
  3. What does the S&P 500 index measure and how is it calculated?

    Learn about what exactly the S&P measures and why it's used by market participants as a tool to understand the broader stock ... Read Answer >>
  4. How can electricity be traded as a commodity by an individual investor?

    Learn the characteristics unique to electricity trading as a commodity and how investors can trade electricity futures on ... Read Answer >>
  5. Is it Possible to Invest in an Index?

    While you cannot buy indexes, which are just benchmarks, we'll show you three ways for you to mirror their performance. Read Answer >>
Trading Center