Index Methodology- MSCI EMU Ricardo Comparative
Advantage Fixed Basket 25 Index- MSCI EMU Ricardo Comparative
Advantage Fixed Basket 25 Decrement
5% Index
September 2024

© 2024 MSCI Inc. All rights reserved. Please refer to the disclaimer at the end of this document.

- MSCI EMU RICARDO COMPARATIVE ADVANTAGE FIXED BASKET 25 INDEX- MSCI EMU RICARDO COMPARATIVE ADVANTAGE FIXED BASKET 25
DECREMENT 5% INDEX | August 2024

Contents
1.

Introduction .......................................................................................................... 3

2.

Index Construction................................................................................................ 4

2.1. Applicable Universe....................................................................................................... 4
2.2. Eigible Universe ............................................................................................................. 4
2.2.1. Euro Denominated Securities ................................................................................. 4
2.3. Selected Universe………………………………………………………………………………………………….………..42.4. Weighting Scheme……………………………………………………………………………………………………….….5
2.5. Application of the MSCI Decrement Indexes Methodology ....................................... 5
3.

Maintenance of the Index...................................................................................... 6
3.1. Quarterly Index Reviews............................................................................................... 6
3.2. Daily Decrement Calculation ....................................................................................... 6
3.3. Conditions for Terminating the Index…….………………………….…………………………………………6
3.4. Ongoing Event Related Changes ................................................................................. 6

Appendix 1: Methodology Set ...................................................................................... 8
Appendix 2: MSCI EMU Ricardo Comparative Advantage Top 25 5% Decrement SelectIndex ........................................................................................................................... 9© 2024 MSCI Inc. All rights reserved. Please refer to the disclaimer at the end of this document.

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DECREMENT 5% INDEX | August 2024

1.

Introduction
The MSCI EMU Ricardo Comparative Advantage Fixed Basket 25 Index (the “Index”)1 contains a fixedbasket of securities whose selection is motivated by the theory of comparative advantage createdby the early 19th century British economist David Ricardo. Ricardo's theory of comparativeadvantage holds that countries produce more efficiently by focusing on their strengths and benefit
from focusing on making things they are best at making.
Based on the data as of 3 month prior to the index launch date, a single security has been selected
for inclusion in the Index2 from each GICS®3 Industry Group, from the country in the MSCI EMU Index
that has the highest active weight in this industry.
The MSCI EMU Ricardo Comparative Advantage Fixed Basket 25 Decrement 5% Index aims torepresent the performance of the net total return variant of the Index while applying a constant
markdown (‘synthetic dividend’) of 5% on an annual basis, expressed as a percentage ofperformance.

1 The Indexes are governed by a set of methodology and policy documents (“Methodology Set”), including the present index
methodology document. Please refer to Appendix 1 for more details.
2 Refer to the list of securities in section 2.3
3 GICS, the Global Industry Classification Standard jointly developed by MSCI and S&P Global Market Intelligence.

© 2024 MSCI Inc. All rights reserved. Please refer to the disclaimer at the end of this document.

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DECREMENT 5% INDEX | August 20242.

Constructing the Index

2.1

Applicable Universe
Applicable Universe includes all the constituents of the MSCI ACWI IMI (denoted the “Parent Index”).

2.2

Eligible Universe
The Eligible Universe is constructed from the Applicable Universe by excluding securities ofcompanies based on the exclusion criterion below.

2.2.1 Euro denominated securities
Only Euro denominated securities within the Parent Index are eligible for inclusion in the Index.

2.3

Selected Universe
Securities from the Eligible Universe which belong to the below list of securities are selected for theIndex:AHOLD DELHAIZEALLIANZBANCO SANTANDER
MERCEDES BENZ GROUPESSILORLUXOTTICA
IBERDROLA
L'OREAL
LVMH MOET HENNESSYNOKIA CORP
UPM-KYMMENESANOFISAPSCHNEIDER ELECTRICTOTALENERGIESUNIBAIL-RODAMCO-WE
WOLTERS KLUWER
ASML HLDG
DEUTSCHE TELEKOM
DEUTSCHE POSTANHEUSER-BUSCH INBEVDEUTSCHE BOERSEINDITEXAMADEUS IT GROUP AVONOVIA
UNIVERSAL MUSIC GROUP© 2024 MSCI Inc. All rights reserved. Please refer to the disclaimer at the end of this document.

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DECREMENT 5% INDEX | August 2024

2.4

Weighting Scheme
At each Index Review and at initial construction, the securities selected for inclusion in the Index are
weighted in proportion of their free-float adjusted market capitalization and are then normalized tosum to 100%.
Additionally, the constituent weights are capped to mitigate concentration risk in the Index. The
individual security weights in the final Index are capped at 10%.

2.5

Application of the MSCI Decrement Indexes Methodology
The MSCI Decrement Indexes Methodology4 is applied on the Index to construct the MSCI EMU
Ricardo Comparative Advantage Fixed Basket 25 Decrement 5% Index. The parameters for thedecrement index are noted in Appendix 2.

4 Please refer to the MSCI Decrement Indexes Methodology at http://www.msci.com/index-methodology for details as well as
intended use of such indexes.

© 2024 MSCI Inc. All rights reserved. Please refer to the disclaimer at the end of this document.

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DECREMENT 5% INDEX | August 2024

3.

Maintaining the Index

3.1

Quarterly Index Review
The Index is reviewed on a quarterly basis, coinciding with the February, May, August, and November
Index Reviews of the Parent Index. The pro forma Index is announced nine business days before theeffective date.

3.2

Daily Decrement Calculation
The performance of the MSCI EMU Ricardo Comparative Advantage Fixed Basket 25 Decrement 5%
Index is computed by reducing the performance of the net total return variant of the Index, by a fixed
percentage, on a daily basis using parameters detailed in Section 2.5.

3.3

Conditions for Termination of the Index
If, after an Index rebalance, the number of constituents in the Index falls below 10, due to deletions
from the Parent Index over time or otherwise, MSCI will, by default, terminate the Index in line with
the Index Termination Policy5.

3.4

Ongoing Event-Related Changes
The following section briefly describes the treatment of common corporate events within the Index.
No new securities will be added (except where noted below) to the Index between Index Reviews.
For cases where additions are noted below, securities will be added to the Index only if added to the
Parent Index. Parent Index deletions will be reflected simultaneously.

EVENT TYPE

EVENT DETAILSNew additions to the Parent Index

A new security added to the Parent Index (such as IPO
and other early inclusions) will not be added to theIndex.

Spin-Offs

All securities created as a result of the spin-off of an
existing index constituent will not be added to the index
at the time of event implementation.

Merger/Acquisition

For Mergers and Acquisitions, the acquirer’s post
event weight will account for the proportionate
amount of shares involved in deal consideration, while
cash proceeds will be invested across the Index.
If an existing Index constituent is acquired by a nonIndex constituent, the existing constituent will be

5 The MSCI Index Termination Methodology may be found at http://www.msci.com/index-methodology© 2024 MSCI Inc. All rights reserved. Please refer to the disclaimer at the end of this document.

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- MSCI EMU RICARDO COMPARATIVE ADVANTAGE FIXED BASKET 25 INDEX- MSCI EMU RICARDO COMPARATIVE ADVANTAGE FIXED BASKET 25
DECREMENT 5% INDEX | August 2024

deleted from the Index and the acquiring nonconstituent will not be added to the Index.
Changes in Security Characteristics

A security will continue to be an Index constituent if
there are changes in characteristics (country, sector,
size segment, etc.) Reevaluation for continued
inclusion in the Index will occur at the subsequentIndex Review.

Further detail and illustration regarding specific treatment of corporate events relevant to this Index
can be found in the MSCI Corporate Events Methodology book under the sections detailing thetreatment of events in Capped Weighted and Non-Market Capitalization Weighted indexes.
The MSCI Corporate Events methodology book is available at:https://www.msci.com/index-methodology.

© 2024 MSCI Inc. All rights reserved. Please refer to the disclaimer at the end of this document.

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DECREMENT 5% INDEX | August 2024

Appendix 1: Methodology Set
The Index is governed by a set of methodology and policy documents (“Methodology Set”), including
the present index methodology document as mentioned below:•

Description of methodology set – www.msci.com/index/methodology/latest/ReadMe•

MSCI Corporate Events Methodology – www.msci.com/index/methodology/latest/CE•

MSCI Fundamental Data Methodology –https://www.msci.com/index/methodology/latest/FundData•

MSCI Index Calculation Methodology – www.msci.com/index/methodology/latest/IndexCalc•

MSCI Index Glossary of Terms – www.msci.com/index/methodology/latest/IndexGlossary•

MSCI Index Policies – www.msci.com/index/methodology/latest/IndexPolicy•

MSCI Global Industry Classification Standard (GICS) Methodology –https://www.msci.com/index/methodology/latest/GICS•

MSCI Decrement Indexes Methodology - www.msci.com/index/methodology/latest/Decrement•

MSCI Capped Indexes Methodology - www.msci.com/index/methodology/latest/Capped•

MSCI Global Investable Market Indexes Methodology –www.msci.com/index/methodology/latest/GIMI

The Methodology Set for the Index can also be accessed from MSCI’s webpage
https://www.msci.com/index-methodology in the section ‘Search Methodology by Index Name orIndex Code’.

© 2024 MSCI Inc. All rights reserved. Please refer to the disclaimer at the end of this document.

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DECREMENT 5% INDEX | August 2024

Appendix 2: MSCI EMU Ricardo Comparative Advantage Fixed
Basket 25 Decrement 5% Index
The following parameters are used for the calculation of MSCI EMU Ricardo Comparative
Advantage Fixed Basket 25 5% Decrement 5% Index:
MSCI Decrement Indexes
Methodology Parameters

Parameter Value

1

Currency of Calculation

EUR

2

Return Variant of the Index

Daily Net Total Return3

Decrement Type

Fixed Percentage

4

Decrement Application

Geometric5

Decrement Value

5%

6

Day-count Convention

Actual / 365

7

Index Floor

08

Decrement Frequency

Daily© 2024 MSCI Inc. All rights reserved. Please refer to the disclaimer at the end of this document.

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