First Trust Indxx Aerospace & Defense ETF (MISL US) – Portfolio Construction Methodology

The underlying Indxx US Aerospace & Defense Index offers U.S. equity exposure to companies deriving ≥50% of revenue from defined aerospace and defense sub-themes. The universe spans “Advanced” activities (hypersonic, directed energy, space technologies, UAV/advanced air mobility, autonomous, cybersecurity, C5ISR) and “Traditional” aerospace and defense supply chains. From eligible U.S. listings, up to 50 securities are selected by free-float market-cap rank; float-adjusted, modified market-cap weights are applied with a single-stock cap of 8% and an aggregate cap of 45% for constituents at ≥5% weight, with excess redistributed pro-rata to uncapped names. The index rebalances quarterly and reconstitutes semi-annually, which together moderate turnover while allowing membership to reflect revenue-mix changes and capacity screens typical of thematic strategies.

To explore MISL in more depth, visit our ETF analytics platform for institutional-grade insights — including performance and risk metrics, correlations, sensitivities, and factor exposure: https://www.etfstrategy.com/etf/MISL_US