Methodology Change | Solactive Global Royalties Index | Effective Date 05/04/2023

Today, on the 20/03/2023, Solactive announces the following changes to the methodology of the following Index/Indices (the ‘Affected Indices’):

Rationale for Methodology Change

New regulations under Section 1446(f) clarify the U.S. withholding and reporting requirements on the transfer (i.e. sale) of publicly traded partnerships (PTPs) interests by non-U.S. residents. For PTPs, these new regulations introduce significant WHT consequences for non-U.S. residents, in addition to expanded withholding and reporting burdens for withholding agents and intermediaries.

It is in the best interest of the index strategy to exclude Master Limited Partnerships.

Changes to the Index Guideline

The following Methodology changes will be done in the following points of the Index Guideline (ordered in accordance with the numbering of the affected sections):

Section 2.2 Selection of the Index Components

From (old version):
“[…]
All eligible securities are ranked based on their Free Float Market Capitalization in a descending order. The top 50 securities by Free Float Market Capitalization rank are selected for index inclusion. In case less than 50 securities are eligible, all eligible securities are selected and the Index consists less than 50 Index Components.
[…]”

To (new version):
“[…]
Master Limited Partnerships (MLP) are ineligible for index inclusion. All eligible securities are ranked based on their Free Float Market Capitalization in a descending order. The top 50 securities by Free Float Market Capitalization rank are selected for index inclusion. In case less than 50 securities are eligible, all eligible securities are selected and the Index consists less than 50 Index Components.
[…]”