Created in 1957 as the Commodity Research Bureau’s official commodity-tracking index, this index is the oldest commodity index in the world. The original index received its most recent makeover in 2005 when it was renamed the Reuters/Jefferies Commodity Research Bureau Index (CRB) — quite a mouthful!
The CRB index is widely followed by institutional investors and economists; of all the indexes, it’s perhaps the most widely used as an economic benchmark, although the S&P GSCI and the DJ/AIGCI are also widely used references.
The CRB index has performed well since 2002.
| Year | Total Return |
|---|---|
| 2002 | 23% |
| 2003 | 8.9% |
| 2004 | 11.2% |
| 2005 | 16.9% |
| 2006 | –3% |
| 2007 | 16.5% |
| 2008 | –32% |
| 2009 | 17% |
Ten-year annualized returns for the CRB are 9.02 percent, outpacing many asset classes, including some comparable commodity indexes.
The CRB index tracks all the major commodity component classes.
The CRB index currently tracks a basket of 19 commodities, which are selected based on their liquidity and production value. This index is unique because it is the only index that uses a tiered methodology of distributing weights to commodities. This hybrid approach gives a production value weight to energy products, while assigning fixed weights to other commodities. The components and their weightings are reviewed annually.
| Tiers | Commodity | Weight | Exchange |
|---|---|---|---|
| Tier I | WTI crude oil | 23% | CME |
| Heating oil | 5% | CME | |
| Unleaded gas | 5% | CME | |
| Tier II | Natural gas | 6% | CME |
| Corn | 6% | CME | |
| Soybeans | 6% | CME | |
| Live cattle | 6% | CME | |
| Gold | 6% | CME | |
| Aluminum | 6% | LME | |
| Copper | 6% | CME | |
| Tier III | Sugar | 5% | ICE |
| Cotton | 5% | ICE | |
| Cocoa | 5% | ICE | |
| Coffee | 5% | ICE | |
| Tier IV | Nickel | 1% | LME |
| Wheat | 1% | CME | |
| Lean hogs | 1% | CME | |
| Orange juice | 1% | ICE | |
| Silver | 1% | CME |
