What does the Bloomberg Commodity Index (BCOM) primarily consist of?

The Bloomberg Commodity Index (BCOM) primarily consists of futures contracts on 22 physical commodities, which include a diverse mix of energy, precious metals, industrial metals, agricultural products, and livestock. This index is designed to provide a broad representation of the commodity markets, and it allows investors to gain exposure to the performance of these physical goods.

The inclusion of physical commodities rather than financial instruments or equity shares is significant because it reflects the real-world supply and demand dynamics of these commodities. Movement in the prices of these underlying physical goods can have a direct impact on the value of the futures contracts, making BCOM an important tool for investors seeking exposure to commodity price movements, inflation hedging, or diversification in their portfolios.

Overall, the structure of the BCOM as a collection of futures contracts on physical commodities distinguishes it from other financial indices, which might focus on stocks, options, or other derivatives.