Spot Indexes: Not What You Think They Are
Spot returns in the commodity asset class can be confusing for many investors. Commodity spot indexes were created to address the overarching need for a true indicator of a given commodity’s price for immediate delivery while also avoiding the complexity of various venues and delivery types in the true spot market.
However, there's confusion among investors who take the name “spot indexes” at face value and believe they track the spot prices of commodities. While this confusion is understandable, these benchmark indexes should be viewed as proxies of underlying spot-price movements, not as expectations for the performance of a commodity investment.