by Dan Norcini
Trader Dan Norcini
Every
year, the various commodity indices, that are used by hedge funds and
index funds to benchmark against, have a reweighting of the various
commodity inputs that are used to comprise each particular index. During
this reweighting process, the percentage of some commodities are
increased while the percentage of others are decreased. As a result,
those funds benchmarking against the index, are forced to recalibrate
their particular portfolios, selling some commodity positions while
buying some new commodity positions in order to come into alignment with
the new weightings.
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