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EQM Future of Defence Index

FUTURE OF DEFENCE INDEX

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In order to be eligible for inclusion in the index, companies must meet the following conditions:

  • The initial Universe is composed of global equities trading on a major global exchange headquartered in NATO+ countries which includes NATO member countries and select major non-NATO allies.
  • Constituent business operations must derive more than 50% of their revenues from the manufacture and development of military aircraft and/or defense equipment (military armored vehicles & tanks, weapon systems and missiles, munitions and accessories, electronics & mission systems, and naval ships), defence technology applications, or cyber security contracting with a NATO+ member nation verified by publicly available contract information.
  • Constituent business operations in cyber security, contracted with a NATO+ member country.
  • Constituents must be at least $1 billion USD in market capitalization with a minimum free float of 20%.
  • Constituents must have an average daily traded value of at least $1 million USD over the last three months.
  • Maximum country weighting is 60% in aggregate.
  • Constituent business operations must be in compliance with United Nation Global Compact (UNGC) principles and Organisation for Economic Cooperation (OECD) Guidelines for Multinational Enterprises as determined by EQM through a review process of publicly available data provided by the company in regulatory filings (such as Annual Reports, 10-Ks, 10-Qs, 20-Fs, 8-Ks), quarterly earnings reports.
  • Index constituents are weighted according to their free-float market capitalization with a maximum weighting of 5% per component and a minimum position size of 20 bps at the time of rebalance.

The daily price and return of the EQM Future of Defence Index (NATOTR) is BMR administrated, calculated and published by BITA GmbH.

The EQM Future of Defence Index is a passively managed index. It is not possible to invest in an index. For more information on the UCITS ETF tracking this index, contact HANETFS.

Quotes for the EQM Future of Defence Index can be found each day under the symbol NATOTR on Bloomberg, on Reuters as .NATOTR and from other financial data providers.

 

The company did not meet the selection criteria when the index was last reconstituted. Companies that now meet index selection criteria will become candidates for inclusion at the next reconstitution date.

Eligible initial public offerings will be considered for inclusion on the index’s next scheduled quarterly reconstitution date.

 

If an index component’s stock is discontinued due to a merger or acquisition, the index committee may, at its sole discretion, replace the discontinued component at the time of discontinuation if more than 30 calendar days remain until the next reconstitution date. The discontinued component will either be deleted entirely or be replaced with the next eligible security from a reserve list. The replacement will be given the appropriate weighting given the securities country of domicile. If there are not more than 30 calendar days remaining until the next reconstitution date, the index committee will wait until the next reconstitution date to make the replacement. In this scenario, any funds received from the discontinued security will be distributed to the remaining index components pro rata.

The index is rebalanced quarterly each January, April, July, and October.