NEW YORK (AFX) - Merrill Lynch & Co. on Friday said it launched a new index aimed at tracking commodity futures based on their importance to the global economy.
Eighteen commodities were chosen for the Merrill Lynch Commodity index eXtra, first based on their liquidity and then according to their significance to the worldwide economy, Merrill said. The components were also divided into sub-indices: energy, grains and oilseeds, industrial metals, soft commodities, precious metals and livestock.
Merrill noted that energy futures are the largest sub-group, accounting for 60 percent of the index. Precious metals comprise the smallest sub-group at 3.9 percent of the index.
In addition, the index has a special mechanism that automatically rolls over expired contracts to avoid physical delivery of underlying commodities. A longer buying and selling period should also improve returns by reducing pressure to sell too quickly, Merrill said.
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