Vident U.S. Diversified Real Estate ETF (PPTY US) – Portfolio Construction Methodology

The underlying USREX – U.S. Diversified Real Estate Index targets US-listed real estate operating companies and equity REITs that own income-producing properties across major sectors and metropolitan areas. Eligible securities are listed on US exchanges, primarily derive revenue from real estate ownership or operation, and have market cap of at least USD 750 million, with additional dollar-volume trading requirements to ensure liquidity; lower market cap and liquidity thresholds apply to existing constituents to reduce turnover. The index allocates target weights by property type and metropolitan area using underlying real estate exposures rather than equity market cap, then selects and weights issuers so that aggregate property-type and location weights approximate those targets while tilting away from highly leveraged balance sheets. Individual constituents are capped at 4% of index weight at each semiannual January and July reconstitution and rebalance, with further diversification constraints applied at the property-type and metro-area levels.

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