First Trust Emerging Markets Human Flourishing ETF (FTHF US) – Portfolio Construction Methodology

The underlying Emerging Markets Human Flourishing Index offers large- and mid-cap emerging markets equity exposure with systematic tilts toward stronger human-rights environments and higher-quality companies. The index starts from the Bloomberg emerging markets large- and mid-cap universe and keeps issuers with free-float market cap ≥ USD 500 million and 90-day ADV ≥ USD 5 million. A Human Dignity Score ranks countries; only those in the top half remain eligible. Issuers are then screened to remove United Nations Global Compact violators and firms earning ≥10% of revenue from abortion, adult entertainment, tobacco, alcohol or gambling. From this universe, the 150 largest issuers by free-float market cap are shortlisted and the top 100 by Bloomberg Quality Score are selected. Constituents are free-float market cap weighted with 8% stock caps, 20% country caps, sector weights limited to 10 percentage points above the parent, and rebalancing in April and October.

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