IQ US Large Cap R&D Leaders ETF (LRND US) – Portfolio Construction Methodology

The underlying NYLI U.S. Large Cap R&D Leaders Index targets U.S. large-cap companies with the highest research-and-development spending. The universe is the Russell 1000 Index, representing large-cap U.S. equities defined by Russell’s market-cap ranking and buffering. From this set, issuers are ranked by trailing one-year R&D expense using standardized accounting data, and the top 100 issuers by R&D level are selected; non-reporters are excluded. Constituents are weighted in proportion to their R&D spending so that weights reflect each company’s share of aggregate index R&D, not its market cap. At each reconstitution, single-name weights are constrained to the greater of 5% or the Russell 1000 Growth Index issuer weight plus 2%, and sector weights to the greater of 30% or the Growth index sector weight plus 5%, with excess redistributed pro rata. The index is reviewed, reconstituted and reweighted quarterly in March, June, September and December.

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