Some further info:Key dates The Selection Day is Friday 15...

Some further info:

Key dates The Selection Day is Friday 15 January 2021, meaning Solactive will assess the Free Float Market Capitalisation and liquidity thresholds of all companies within the upcoming selection initial coverage list to decide which companies are added, and how many shares need to be acquired. Solactive will also assess the incumbent Index Components to work out how many shares in those stocks need to be held – including whether any shares need to be sold to generate funds to reallocate towards the new entrants.

The Adjustment Day is Friday 29 January 2021. This is the date by which all the rebalancing needs to be completed and the new allocations will be announced, implying that URA has up to 10 trading days to build or adjust positions in Index Component companies.(9 trading days on the ASX due to Aust Day closure)

Points of Interest

1. The majors are capped. Cameco and Kazatomprom are each capped at 22.5% of the fund – close to their current weightings. This means that as those companies continue to grow in size as the bull market develops, further fund allocations won’t be made to them.

2. Majors may need to be trimmed along the way. If either Cameco or Kazatomprom appreciate to a value that exceeds 25% of the Fund, they will be capped (ie sold down) to 22% with the proceeds redistributed across non-capped stocks. This occurs on the Monitoring Adjustment Days in April and October.

3. The large juniors are also capped. The aggregate weight of all Pure Play companies with a weight larger than 5% is capped at 47.5% - given this bracket includes Cameco and Kazatomprom, there is little room for anyone else. Further, the maximum weight for all other pure play companies is capped (individually) at 4.75%. The effect of this, as the cycle matures, is that the large juniors such as Nexgen, Denison and Energy Fuels will cap out and no longer benefit from their share price appreciation.

4. Small-cap juniors are also capped. The aggregate weight of Index Component stocks with a market capitalisation less than US$100M must not exceed 10% of the fund. Exceeding the cap means all those juniors are reduced proportionately to 9% on each Monitoring Adjustment Day (April/October). Although this won’t be an issue for this rebalancing, going forward I would expect the US$50-100M bracket to become more crowded.

Above courtesy of Brandon Munro.