Rogers International Commodity Index
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The Rogers International Commodity Index ( RICI ) is a composite, USD based, total return index, designed by Jim Rogers on July 31st, 1998.
The index was designed to meet the need for consistent investing in a broad-based international vehicle. Index is famous for being one of the most diverse commodity indexes — it is being calculated from 35[1] commodities from 11 international exchanges. List of commodities is subject to change by RICI Committee, in general commodity will be considered fit to be included in the index, if it plays a significant role in worldwide (developed and developing countries) consumption. Consumption is measured via tracking international imports/exports pattern. If one particular commodity is being traded on more than one international exchange, the most liquid contract globally, in terms of volume and open interest combined is then aimed to be selected for inclusion in the index.
Index is divided into 3 sub-indices, which reflect the 3 sub-segments of the RICI - RICI Agriculture, RICI Energy and RICI Metals. Sub-indices contribution to main index are Agriculture - 34.90%, Energy - 44.00%, Metals - 21.10%.
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[edit] Calculation key points
Calculation is being done in realtime and settlement values are being published daily.
Each commodity is being rebalanced on start of each month towards initial weights, determined annually by RICI Committee.
For each commodity most valid (most active traded from committee point of view) expiration is chosen to be included into RICI calculation. Index is being rolled at the end of each month to contracts that are expected to be most active during next month. Generally, if the next calendar month of a futures contract includes a first notice day, a delivery day or historical evidence that liquidity migrates to a next contract month during this period, then the next contract month is intended to be applied to calculate the index – taking legal constraints into account.
The Index calculation methodology is reviewed annually by the index committee during its meeting in December and possibly amended thereafter.
[edit] Values
Initial value of RICI was set at July 31, 1998 to 1000. Since then up to December 2007 index grows up by more than 300% to values of 4000+. Being known as one of the most diversified commodities index, RICI is known to have very large compound returns.[2]
[edit] Investment Information
The RICI and its sub-indices are managed by Diapason Commodities Management, LLC. Diapason primarily markets these funds mostly to institutional investors.
The minimum investment is $100,000 USD, and the indices have a 1% annual management fee.
[edit] See also
- Why Raw Materials? (by Jim Rogers)
- The Rogers Index: how to best invest in commodities
- RICI Index reference page
- Jim Rogers: Hot on Commodities
- Not All Commodity Indexes Are Created Equal
