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Bridge over ocean
1 November 2012 Financial Analysts Journal Volume 68, Issue 5

Index Investment and the Financialization of Commodities

  1. Ke Tang
  2. Wei Xiong

The authors found that, concurrent with the rapidly growing index investment in
commodity markets since the early 2000s, prices of non-energy commodity futures
in the United States have become increasingly correlated with oil prices; this
trend has been significantly more pronounced for commodities in two popular
commodity indices. This finding reflects the financialization of the commodity
markets and helps explain the large increase in the price volatility of
non-energy commodities around 2008.

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