Bloomberg Indices has recently hired Jigna Gibb as Head of Commodities and Crypto Index Products, to lead its commodities and crypto product offering, which includes the mighty Bloomberg Commodities (BCOM) index suite which is linked to products totalling over USD100 billion in assets.
Gibb arrives at Bloomberg from Deutsche Bank and before that Barclays and Goldman Sachs and notes that she has seen full cycles in commodities. “Bloomberg has fantastic depth of index servicing and multi-asset offerings,” she says. “There is a dedicated team in commodities, covering sales, research, product management and development and also the operation and production side, but we all work in partnership, delivering to a range of clients. We actively engage with our clients, rather than just saying here is an idea, buy the idea.”
Clients are drawn from institutional investors, hedge funds, ETF providers, family offices and private banks.
“Bloomberg has the leading broad-based commodity benchmark and is backed by exceptional research and data,” she says. BCOM was established in 1998, has been calculated by Bloomberg for the last 10 years and is based on four pillars of liquidity, diversification, economic significance, and continuity. The index is exposed to energy, industrial metals, precious metals, grains, softs and livestock commodity sectors.
Gibb comments that new products based on the BCOM feature indices that offer an additional proponent of risk premium, such as BERY, the Bloomberg Enhanced Roll Yield Index, or thematics, covering prevalent themes such as low carbon or transition metals. She confirms that Bloomberg is looking to launch new indices to sit within the thematic basket.
ESG continues to be on the radar for many investors. However, there remains a headline challenge of how to combine commodities and ESG together, and Bloomberg has tackled this by launching the BCOM Carbon-Tilted index.
“We lean on Bloomberg Intelligence and BloombergNEF to provide more colour on particular components,” she says, and BISL has six key themes in commodities that we are focused on in 2024. These are the economic conditions in China, plus the emergence of India in the role of being a heavy importer of commodities; Geo-politics, which continues to be an issue along with its impact for commodity markets; Energy transition as economies move away from fossil fuels; Weather impact on production and supply chain logistics; Inflation and finally, the shape of the future curves as an indication of physical market dynamics.
“These are key drivers that lead to prices moving higher or lower, and so these are factors we need to monitor” she says.
The crypto offering from Bloomberg is a separate segment within the commodity offering and a growth segment, addressing the market’s interest and need, Gibb says, adding: “It’s a product set that we nurture in its early stages and has been another portfolio diversifier.”
She notes that in 2022 all other asset classes failed to perform but commodities continued to have that strong trajectory.
“They are back in the spotlight in terms of a portfolio asset allocation class conversation,” she says, having reverted a little in 2023 when crypto came back in acting as a diversifying asset class.
Gold is one of the big components of the BCOM index and has its own dynamics, very different from oil, Gibb notes, describing it as having a profile more like FX, less driven from physical market supply and demand.
The target weights of BCOM are derived based on data that is a third world production data and two thirds on underlying liquidity in the futures market.
“What sets BCOM apart is its annual rebalancing nature and ability to adjust composition. As a commodity gets more relevant with respect to economic data it will have a potential for representation in the BCOM index.”
