First Trust Bloomberg Emerging Market Democracies ETF (EMDM US) – Portfolio Construction Methodology

The underlying Bloomberg Emerging Market Democracies Index provides exposure to large and mid-cap companies from emerging markets whose countries meet defined democracy criteria. Eligible securities must belong to the Bloomberg Emerging Markets Large & Mid Cap universe and pass Freedom House thresholds for Electoral Democracies based on Political Rights, Civil Liberties and Electoral Process scores. Each security must have free float market cap ≥ USD 500 million and 90-day average daily value traded ≥ USD 5 million; only one share class per issuer is included. From this universe the index selects the top 100 issuers by free float market cap. Initial stock weights are proportional to issuer free float market cap multiplied by the Freedom House score of the issuer’s country. Country weights are then capped at 15%, with excess redistributed across uncapped countries. The index is reconstituted annually and rebalanced semi-annually each April and October.

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