Commodity Online
MUMBAI:  Do you know what is the Rogers International Commodity Index (RICI)? If not, know all about it here.

Rogers International Commodity Index (RICI) is a composite, US dollar-based, total return index created by Jim Rogers in the late 1990s. Funds were first invested to track the Index on August 1, 1998.

RICI was designed to meet the need for consistent investing in a broad based international vehicle; it represents the value of a basket of commodities consumed in the global economy, ranging from agricultural to energy to metal products. The value of this basket is tracked via Futures contracts on 36 different exchange-traded physical commodities, quoted in four currencies, listed on eleven exchanges in five countries.

The Index represents the value of a compendium (or 'basket') of commodities employed in the global economy, ranging from agricultural products (such as wheat, corn and cotton) and energy products (including crude oil, gasoline and natural gas) to metals and minerals (including gold, silver, aluminum and lead).

As of July 31, 1998, there were thirty-five different contracts represented in the Rogers International Commodity Index. The value of each Rogers International Commodity Index component is based on monthly closing prices of the corresponding Futures and/or forward contracts, each of which is valued as part of a fixed-weight portfolio. Near month contracts on international commodity markets are employed to the extent possible.

The Rogers International Commodity Index selection and weighting of the portfolio is reviewed not less than annually, and weights are assigned in the December preceding the start of each New Year. The Rogers International Commodity Index was developed by Jim Rogers to be an effective measure of the price action of raw materials on a worldwide basis.

The broad based representation of commodities contracts is intended to provide two important characteristics: The large number of contracts and underlying raw materials represents “diversification” and the global coverage of those contracts reflects the current state of international trade and commerce.

Accordingly, in many cases, allocation of a portion of an investment portfolio in a product based on the Rogers International Commodity Index may reduce overall volatility while providing the opportunity to profit, assuming the continued growth of the global economy and that such growth translates into higher prices for those commodities.

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