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Question
What is the primary reason the S&P GSCI has historically been heavily weighted toward energy, sometimes at 55-70% of the index?
1
The GSCI weights commodities by world production volumes, and oil and gas are the largest commodities by global production value
2
Goldman Sachs, which designed the index, managed significant energy assets and weighted the index toward its areas of expertise
3
The index's designers believed oil was the most important commodity for inflation hedging purposes
4
Energy futures are the most liquid commodity contracts, so the index overweights them to minimise transaction costs
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