Characteristics of Commodity Indices

In recent years, the popularity of commodity indices has surged among investors looking to gain exposure to commodity markets. A specific well-known commodity index is the Bloomberg Commodity Index (BCI), which is designed to track the performance of a diversified basket of physical commodities.

Investors considering investment in commodity indices should be aware of factors affecting their performance, including rolling costs, market liquidity, and correlation with other asset classes. Additionally, different indices may employ varying methodologies and weightings which can significantly influence returns.

Based on this context, which of the following statements accurately describes a characteristic of commodity indices?