TalkingPoints
Expanding the Equity Opportunity Set in New Zealand
The S&P/NZX Emerging Opportunities Index reaches beyond
the S&P/NZX 50 Index to capture a unique mix of investablesmall- and mid-sized New Zealand companies.
1. Why is this index being introduced now?

Michael Orzano, CFA
Senior Director
Global Equity Indices
S&P Dow Jones Indices

As the principal broad market equity benchmark in New Zealand, theS&P/NZX 50 Index defines the investable opportunity set for New Zealand fundmanagers. Our latest addition to the S&P/NZX Series, the S&P/NZX Emerging
Opportunities Index takes an innovative approach to defining small- and mid-cap
companies by including the smaller members of the S&P/NZX MidCap Index andthe largest, most liquid members of the S&P/NZX SmallCap Index. In doing so, itreaches beyond the S&P/NZX 50 Index, expanding the opportunity set while still
utilizing size and liquidity criteria to support investability.

Exhibit 1: Average Proportion of the S&P/NZX Emerging
Opportunities Index outside of the S&P/NZX 50 Index
50%

46%

40%30%
21%

20%
10%0%

Number of Stocks

Index WeightSource: S&P Dow Jones Indices LLC. Data from June 2015 to June 2019. Chart is provided forillustrative purposes.

While the S&P/NZX 50 Index remains the primary broad market benchmark
in New Zealand, the S&P/NZX Emerging Opportunities Index seeks to provide a fresh
tool to measure the performance of small- and mid-sized New Zealand companies.

Register to receive our latest research, education, and commentary at go.spdji.com/SignUp.

TalkingPoints

Expanding the Equity Opportunity Set in New Zealand

2. How does the index work?
The eligible universe is defined as constituents of the S&P/NZX All Index that are not members of the S&P/NZX 20 Index.
Minimum float market cap and median daily value traded thresholds of NZD 100 million and NZD 35,000, respectively, arerequired for inclusion. In addition, maximum total and float-adjusted market cap thresholds of NZD 1.5 billion and NZD 1 billion,
respectively, are employed in order to ensure relatively large companies are excluded. The index is weighted by float-adjusted
market cap and is rebalanced quarterly, in line with other S&P/NZX equity indices.

3. How can the index be used?
The index is designed to be a complement to the S&P/NZX 20 Index, which comprises 20 of the largest, most liquid New Zealandcompanies. When used in tandem, the two indices essentially capture the entire investable market in New Zealand. The
index is intended for use as a benchmark for small- and mid-cap investment strategies or as an underlying index for passive
investment products.

4. What are some unique characteristics of the index?
The S&P/NZX Emerging Opportunities Index has a meaningfully different size profile compared with the existing S&P/NZX sizeindices and the S&P/NZX 50 Index. As depicted in Exhibit 2, the weighted average total market cap of the index is less than
one-third that of the S&P/NZX MidCap Index and more than double that of the S&P/NZX SmallCap Index. Unsurprisingly, it is far
smaller than the S&P/NZX 50 Index or S&P/NZX 20 Index, which are heavily weighted to the largest New Zealand companies.

Exhibit 2: Index Characteristics
Characteristics

S&P/NZX Emerging
Opportunities Index

S&P/NZX
MidCap Index

S&P/NZX
SmallCap Index

S&P/NZX
20 Index

S&P/NZX
50 Index

3738662050

1,648.85

6,334.70

1,188.28

12,174.25

12,174.25

Number of ConstituentsConstituent Total Market Cap (NZD Millions)
Maximum Market Cap
Minimum Market Cap

70.44

307.53

1.48

2,292.51

307.53

Average Market Cap

616.16

1,684.32

158.91

5,298.89

2,746.30

Weighted Average Market Cap

796.132,531.67

334.637,080.86

5,945.68

Median Market Cap

572.26

1,086.60

87.35

4,118.59

1,284.41

Largest Constituent Weight (%)

7.08

7.96

6.39

12.56

10.10

Top 10 Constituents Weight (%)

52.45

55.48

45.61

73.88

59.41

Source: S&P Dow Jones Indices. Data as of June 28, 2019. Table is provided for illustrative purposes.

The index also has a distinct sector composition compared with the S&P/NZX 20 Index and S&P/NZX MidCap Index, as illustrated inExhibit 3. In addition to its higher weight in Real Estate, the S&P/NZX Emerging Opportunities Index has had uniquely high exposure
to Information Technology, Consumer Staples, and Consumer Discretionary.

TalkingPoints

Expanding the Equity Opportunity Set in New Zealand

Exhibit 3: Comparative Sector Weights
30
S&P/NZX Emerging Opportunities Index

S&P/NZX 50 Index

S&P/NZX MidCap Index

25

Weight (%)

20151050Real EstateConsumer
Staples

Information
Technology

Health Care

Consumer
Discretionary

Financials

Industrials

Communication
Services

EnergyMaterials

Utilities

Source: S&P Dow Jones Indices. Data as of June 28, 2019. Chart is provided for illustrative purposes.

5. What are the key benefits of the index?
Broad Opportunity Set
The S&P/NZX Emerging Opportunities Index reaches outside of the S&P/NZX 50 Index—generally considered the investable
opportunity set for New Zealand equities—allowing for exposure to a wider range of companies.

Precision
The index targets a unique segment of the New Zealand equity market, including a mix of small- and mid-sized New Zealandcompanies that are not measured by existing indexes.

Diversification
The index has distinct investment characteristics compared with large-cap and broad market New Zealand benchmarks and hashistorically had a relatively low correlation to the broader New Zealand equity market.

Expanding the Equity Opportunity Set in New Zealand

TalkingPoints

General Disclaimer
Copyright © 2019 S&P Dow Jones Indices LLC. All rights reserved. STANDARD & POOR’S, S&P, S&P 500, S&P 500 LOW VOLATILITY INDEX, S&P 100, S&P COMPOSITE
1500, S&P MIDCAP 400, S&P SMALLCAP 600, S&P GIVI, GLOBAL TITANS, DIVIDEND ARISTOCRATS, S&P TARGET DATE INDICES, GICS, SPIVA, SPDR and INDEXOLOGY
are registered trademarks of Standard & Poor’s Financial Services LLC, a division of S&P Global (“S&P”). DOW JONES, DJ, DJIA and DOW JONES INDUSTRIAL AVERAGE
are registered trademarks of Dow Jones Trademark Holdings LLC (“Dow Jones”). These trademarks together with others have been licensed to S&P Dow Jones IndicesLLC. Redistribution or reproduction in whole or in part are prohibited without written permission of S&P Dow Jones Indices LLC. This document does not constitutean offer of services in jurisdictions where S&P Dow Jones Indices LLC, S&P, Dow Jones or their respective affiliates (collectively “S&P Dow Jones Indices”) do not havethe necessary licenses. Except for certain custom index calculation services, all information provided by S&P Dow Jones Indices is impersonal and not tailored to theneeds of any person, entity or group of persons. S&P Dow Jones Indices receives compensation in connection with licensing its indices to third parties and providing
custom calculation services. Past performance of an index is not an indication or guarantee of future results.
It is not possible to invest directly in an index. Exposure to an asset class represented by an index may be available through investable instruments based on thatindex. S&P Dow Jones Indices does not sponsor, endorse, sell, promote or manage any investment fund or other investment vehicle that is offered by third parties
and that seeks to provide an investment return based on the performance of any index. S&P Dow Jones Indices makes no assurance that investment products basedon the index will accurately track index performance or provide positive investment returns. S&P Dow Jones Indices LLC is not an investment advisor, and S&P Dow
Jones Indices makes no representation regarding the advisability of investing in any such investment fund or other investment vehicle. A decision to invest in any suchinvestment fund or other investment vehicle should not be made in reliance on any of the statements set forth in this document. Prospective investors are advised
to make an investment in any such fund or other vehicle only after carefully considering the risks associated with investing in such funds, as detailed in an offering
memorandum or similar document that is prepared by or on behalf of the issuer of the investment fund or other investment product or vehicle. S&P Dow Jones Indices
LLC is not a tax advisor. A tax advisor should be consulted to evaluate the impact of any tax-exempt securities on portfolios and the tax consequences of making any
particular investment decision. Inclusion of a security within an index is not a recommendation by S&P Dow Jones Indices to buy, sell, or hold such security, nor is it
considered to be investment advice.
These materials have been prepared solely for informational purposes based upon information generally available to the public and from sources believed to bereliable. No content contained in these materials (including index data, ratings, credit-related analyses and data, research, valuations, model, software or otherapplication or output therefrom) or any part thereof (“Content”) may be modified, reverse-engineered, reproduced or distributed in any form or by any means, or stored
in a database or retrieval system, without the prior written permission of S&P Dow Jones Indices. The Content shall not be used for any unlawful or unauthorizedpurposes. S&P Dow Jones Indices and its third-party data providers and licensors (collectively “S&P Dow Jones Indices Parties”) do not guarantee the accuracy,completeness, timeliness or availability of the Content. S&P Dow Jones Indices Parties are not responsible for any errors or omissions, regardless of the cause, for theresults obtained from the use of the Content. THE CONTENT IS PROVIDED ON AN “AS IS” BASIS. S&P DOW JONES INDICES PARTIES DISCLAIM ANY AND ALL EXPRESSOR IMPLIED WARRANTIES, INCLUDING, BUT NOT LIMITED TO, ANY WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE, FREEDOM
FROM BUGS, SOFTWARE ERRORS OR DEFECTS, THAT THE CONTENT’S FUNCTIONING WILL BE UNINTERRUPTED OR THAT THE CONTENT WILL OPERATE WITH ANYSOFTWARE OR HARDWARE CONFIGURATION. In no event shall S&P Dow Jones Indices Parties be liable to any party for any direct, indirect, incidental, exemplary,compensatory, punitive, special or consequential damages, costs, expenses, legal fees, or losses (including, without limitation, lost income or lost profits andopportunity costs) in connection with any use of the Content even if advised of the possibility of such damages.
S&P Global keeps certain activities of its various divisions and business units separate from each other in order to preserve the independence and objectivity of theirrespective activities. As a result, certain divisions and business units of S&P Global may have information that is not available to other business units. S&P Global has
established policies and procedures to maintain the confidentiality of certain non-public information received in connection with each analytical process.
In addition, S&P Dow Jones Indices provides a wide range of services to, or relating to, many organizations, including issuers of securities, investment advisers,
broker-dealers, investment banks, other financial institutions and financial intermediaries, and accordingly may receive fees or other economic benefits from thoseorganizations, including organizations whose securities or services they may recommend, rate, include in model portfolios, evaluate or otherwise address.
NZX and NXAZ are trademarks of NZX Limited and have been licensed for use by S&P Dow Jones Indices.