Index description

A spotlight on the companies improving human efficiency developed by Lux Capital.

The Lux Automation + Tech Index is designed to track the performance of companies that are primarily engaged and involved in the automation industry based on analysis of the products and services offered by those companies (including industrial system integrators, automated devices, and fabless chip companies). 

Thesis

Data, machine learning, and semiconductor technology are ushering in a renaissance in automation: machines that historically were precisely controlled are now being “taught.” These machines, like humans, use pattern recognition obtained from data to solve known, and potentially unknown, problems. A new “golden age” of automation is upon us: a new software paradigm layered on top of ever-improving electronics that have already found their place from our wrists to package-sorting robots in fulfillment centers. We expect startups and public companies alike to cultivate talent that harnesses this resource.  As a result, they will further improve manufacturing and logistics, making them more efficient and resilient to weather unexpected shocks. They will enable new product categories and add features to existing products that make people more efficient, and ultimately lead to more jobs and greater prosperity for humanity.

Eligible security criteria

A security must be involved in some aspect of the automation industry which Lux broadly defines as semiconductors, AI inference, nature language processing (NLP), self-driving vehicles, perception devices, and factory automation. 

A security must be engaged in: training advanced AI algorithms, performing AI inference at the edge, leveraging the power of transformers and NLP in enterprise applications, creating digital twins via AI-enabled scans, interpreting medical images via AI, self-driving cars, aircraft, and watercraft, eyes/perception for autonomy, unmanned surface vehicles, machine learning enabled signal extraction, and factory robots who mimic human interaction 

Per GECS industry coding, these companies are more than likely classified as Industrial Distribution, Industrial Products - Electrical Equipment & Parts, Industrial Products - Tools & Accessories, Industrial Products - Specialty Industrial Machinery, Transportation - Airports & Air Services, Transportation - Marine Shipping,  Transportation - Integrated Freight & Logistics, Software—Infrastructure, Semiconductor Equipment & Materials, and Semiconductors.

We exclude most if not companies categorized as Asset Management, Communications Equipment, Healthcare Plans, Household & Personal Products, Insurance - Brokers, Medical Care Facilities, Medical Distribution, REIT - Healthcare Facilities, Medical Devices, Medical Instruments & Supplies, Software - Application,Specialty Retail, Drug Manufacturers - General, Drug Manufacturers - Specialty +Generic,and Biotechnology per GECS Industry coding. 

All companies in the index must be publicly traded securities that meet the following conditions:

Additional eligibility requirements

• Eligible security types generally include common stocks, ordinary shares and depositary shares.
• Only long positions are permitted. 
• One security per issuer is permitted. If an issuer has multiple securities, the security with the highest three-month average daily dollar trading volume (ADDTV) will generally be considered for possible inclusion in the Index.
• A security must be listed on an Index Eligible Global Exchange. If, at reconstitution, Lux becomes aware that an issuer or security will soon undergo a fundamental change that makes it ineligible, it will be removed from consideration. This includes entering into a definitive merger or acquisition agreement or other pending arrangement that would make it ineligible for Index inclusion, or a filing of bankruptcy or similar protection from creditors.

Index operations

Index calendar

Constituent selection 

Constituent selection process

All securities that meet the applicable eligible security criteria are included in the Index.

Constituent Weighting

Constituent weighting scheme

The Index is a free float market capitalization equally weighted index.

The quarterly Reconstitution is carried out by the Lux Automation + Tech Index committee. The potential index constituents are provided for final verification, and changes are made accordingly to index membership.

Securities that meet the applicable eligibility criteria are included in the index.

In addition, for a security to be considered as a new addition to the Index, the security must:

Have grown annual revenue at least 10% for each of the last two full fiscal years (can exclude 2020 due to COVID).

For a security to stay in the Index, the security must:

Have grown annual revenue at least 7% in at least one of the last two fiscal years. 

For securities that have fallen below the $500M market cap threshold (calculated as average mkt cap during the quarter) during rebalance sessions, are given a 1 quarter curing period for evaluation and recovery above $500M before removal.

Index maintenance 

Deletion policy

If, at any time during the year other than the Index Reconstitution(s), an Index Security that no longer meets the Eligibility Criteria, or is otherwise determined to have become ineligible for inclusion in the Index, it is removed from the Index. This includes circumstances where an Index Security is determined to be ineligible for continued inclusion in the Index due to bankruptcy, delisting, or a definitive agreement that would likely result in the security no longer being Index eligible. We plan to reference Nasdaq’s Corporate Actions and Events Manual – Equities for detailed handling of the aforementioned event types. 

Replacement policy

Index securities deleted at any time during the year other than the Index Reconstitution(s) are not replaced.

Corporate actions

In the interim periods between scheduled index reconstitution events, individual Index securities may be the subject to a variety of corporate actions and events that require maintenance and adjustments to the Index.  Specific treatment of each type of corporate action or event is described in Nasdaq Corporate Actions and Events Manual – Equities, which is incorporated herein by reference.

In certain cases, corporate actions and events are handled according to the weighting scheme or other index construction techniques employed. Wherever alternate methods are described, the Index will follow the “Non-Market Cap Corporate Action Method.”

Index share adjustments

Other than as a direct result of corporate actions, the index does not normally experience share adjustments between scheduled index rebalance and reconstitution events.

Additional information

Announcements

Lux announces Index-related information via the Lux Automation + Tech website at https://www.luxautomationindex.com/

For more information on the general Index Announcement procedures, please refer to the Lux Index Methodology Policy.

Holiday Schedules

The Index is calculated Monday through Friday and does not close for holidays, as it is a Global Index.

Unexpected market closures

For information on Unexpected Market Closures, please refer to the Lux Index Methodology Policy.

Calculation types

For information on the Index calculation types as well as the mathematical approach used to calculate the Index(es), please refer to the Calculation Manual – Equities & Commodities. 

Recalculation and restatement policy

For information on the Recalculation and Restatement Policy, please refer to the Lux Index Recalculation Policy.

Data sources

For information on data sources and the classification of dividends and associated tax rates, please refer to the Nasdaq Index Methodology Policy.

Contact information

For any questions regarding an Index, please contact Thematic at index@gothematic.com.

Index dissemination

Index values and weightings information are available through Lux Automation + Tech website at https://www.luxautomationindex.com/

For more detailed information regarding Index Dissemination, see the Lux Index Methodology Policy.

Index calculation and dissemination schedule

The Index is calculated five (5) days a week, Monday through Friday, starting with the earliest time zone (Asia/Tokyo) and closing with the latest time zone (America/New York), 12:30:01 Japan Standard Time to 17:16:00 Eastern Time.

Website

For further information, please refer to Lux Automation + Tech website at https://www.luxautomationindex.com/

Governance

Index governance

All Lux Indexes follow the same governance structure. For a detailed list of this information, please see the Lux Index Methodology Policy.

Lux Index Management Committee

The Lux Index Management Committee approves all new Index Methodologies. This committee is comprised of full-time professional members of Lux. The committee meets regularly, and reviews items including, but not limited to, pending corporate actions that may affect Index constituents, statistics comparing the composition of the indexes to the market, companies that are being considered as candidates for addition to an Index, and any significant market events.

For a detailed overview of the Index Management Committee, please see the Lux Index Methodology Policy.

Internal reviews of methodology

For a detailed description on internal reviews of the Methodology, please see the Lux Index Methodology Policy.

Communication with stakeholders and consultations

For a detailed description on Consultations and Communications with Stakeholders, please see the Lux Index Methodology Policy.

Index cessation

Lux has a documented procedure that is followed for Index Cessation that includes termination/retirement of an Index or Index Family.

For more information, please refer to the Lux Index Cessation Policy.

Discretionary adjustment

This Index Methodology was created by Lux to achieve the aforementioned objective of measuring the underlying purpose of each Index governed by this methodology document. Any deviations from this methodology are made in the sole judgment and discretion of Lux so that the Index continues to achieve its objective.

For more information on potential adjustments including Calculation and Pricing Disruptions, Expert Judgment, and Unexpected Reconstitution/Rebalances, please refer to the Lux Index Methodology Policy. 

Glossary of Terms Used in This Document

For the glossary of key terms, please refer to the Lux Index Methodology Policy.

Disclaimer

Lux may, from time to time, exercise reasonable discretion as it deems appropriate in order to ensure Index integrity, including but not limited to, quantitative inclusion criteria. Lux may also, due to special circumstances, if deemed essential, apply discretionary adjustments to ensure and maintain the high quality of the index construction and calculation. Lux does not guarantee that any Index accurately reflects future market performance.

Neither Lux Automation+Tech, nor any of their affiliates, makes any recommendation to buy or sell any security or any representation about the financial condition of any company. Investors should undertake their own due diligence and carefully evaluate companies before investing. The information contained herein is provided for informational and educational purposes only, and nothing contained herein should be construed as investment advice, either on behalf of a particular security or an overall investment strategy. Advice from a securities professional is strongly advised. All Rights Reserved.