Commodidex

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====== Benchmark ======
//A benchmark is typically a broad-based index of securities such as the S&P 500,
MSCI World, or Russell 2000. [(:ref:fisher_investments_energy)]//

There are dozens of different measures, one for each variety of crude. The financial market focuses on two: Brent, and West Texas Intermediate, the grades traded in London and New York, respectively. They suggest a price hovering around $90 a barrel.

{{:a-z:energy_benchmark_differences.png?600|}}

Commonly used benchmarks include the MSCI World, MSCI EAFE, S&P 500, Russell 2000,
and MSCI Emerging Markets. The MSCI World is a market-capitalization weighted index
designed to measure the equity market performance of developed markets (encompass-
ing 23 developed markets, including the US). The MSCI EAFE is a market-capitalization
weighted index that measures the equity market performance of developed markets
excluding the US and Canada. The S&P 500 is a market capitalization weighted index that
measures the equity market performance of a basket of 500 stocks that encompass the
majority of the US equity universe. The Russell 2000 is a market-capitalization weighted
index that measures the equity market performance of the small-cap segment of the US
equity universe. Lastly, the MSCI Emerging Markets is a market-capitalization weighted
index that measures the equity market performance of emerging markets (encompassing
25 emerging market countries). [(:ref:fisher_investments_energy)]

{{:a-z:energy_weight_by_country.png?400|}}

But the sector weights aren ’ t fixed and can change over time—due
to performance differences, additions and deletions of firms to the
indexes, and a variety of other factors. For example, Financials wasn ’ t
always the biggest, and for many decades Industrials dominated. [(:ref:fisher_investments_energy)]

{{:a-z:energy_sub_industry_weights.png?600|}}

It’ s
important to consider the regions as well, because in a top-down con-
text, local economic and political conditions will have a large impact
on sector, industry, and sub-industry performance. For example, <wrap hi>if you
expect the US will perform well overall in the near term, that bodes
well for Oil & Gas Drilling and Oil & Gas Equipment & Services,
where most of those companies are located. And how you expect
Emerging Markets to perform overall should figure into your expecta-
tions for Coal & Consumable Fuels.</wrap> [(:ref:fisher_investments_energy)]

{{:a-z:energy_subindustries_by_region.png?600|}}

So why are they such a small percentage
of the Russell 2000? Because IOCs are generally too large to appear in
the small cap Russell 2000 index. [(:ref:fisher_investments_energy)]

It’ s also important to note many of the world ’ s most significant
Integrated Oil & Gas companies are owned by foreign governments
and therefore are neither publicly traded nor reflected in stock mar-
ket indexes. For example, Saudi Aramco, Saudi Arabia ’ s National Oil
Company, is the largest oil company in the world based on produc-
tion and reserves, but it ’ s not represented in stock market indexes
because it’ s entirely state-owned. [(:ref:fisher_investments_energy)]

Another US-heavy industry is Energy Equipment & Services,
with major energy service firms like Schlumberger and Transocean
contributing heavily to the industry ’ s weight. The industry is grow-
ing outside the US but still remains a relatively small weight in most
foreign benchmarks. [(:ref:fisher_investments_energy)]

Within Emerging Markets, there are virtually no Energy service fi rms. The Oil & Gas Refi ning & Marketing sub-industry is a relatively small weight in all benchmarks except Emerging Markets, where it ’ s the second-largest weight. Geographically, most of these firms reside in emerging markets or the US. [(:ref:fisher_investments_energy)]

{{:msci_acwi_15_largest_iocs.png?600|}}

{{:msci_acwi_15_largest_pubtraded_epfirms.png?600|}}