Prudential Bache Commodities introduces the Bache Commodity Green IndexSM, a multi-faceted approach to holding commodities and materials needed in the production of sustainable energy and the reduction of climate change.
The Growth of the "Green" Sector
The volatile price of oil and the intensified focus on the health of the planet have driven research and development toward the creation of clean, "green" fuels and technology. Given the increased policy focus in the U.S. and other parts of the globe on sustainable energy and climate change reduction, these "green" sectors are likely to continue to expand.
Investor interest has grown at a similar rate as investors not only seek more ethical, "earth-friendly" investments, but also as they come to realize that few economic sectors have this kind of potential for near- and long-term growth.
A New Focus Built on Proven Strength
Building on Bache's unique strength in commodity and materials markets, the Bache Commodity Green Index (BCGI)SM focuses on biofuel and clean air investments. The index utilizes Bache's expertise in commodities for component selection, as well as the unique methodology of the Bache Commodity Index (BCI)SM.
The Bache Commodity Green IndexSM is currently designed to hold two index composites: The Bache Biofuels Composite, with an initial allocation of 60%, and the Bache Clean Air Composite, with an initial allocation of 40%.
Biofuels are given a larger initial weight in the composite index because biofuel markets are currently larger and more developed. As more countries adopt mandatory carbon emissions caps in coming years, it is expected that the BCGISM will become more heavily weighted towards carbon and pollution control markets.
A Unique Methodology
There is currently no "green" product on the market that utilizes this grouping of components, or this index methodology. While competitor "green" indices exist in the area of biofuels, carbon credits, GMO commodities, and environmentally friendly companies, most indices focus on only one sector at a time. Similarly, most indices have a typical "buy-and-hold" strategy that is common to investable indexes.
Only the Bache Green Portfolio holds a cross section of multiple sectors, and employs a dynamic asset allocation trading strategy.