Principal Value ETF (PY US) - Portfolio Construction Methodology

Core Insights - The Principal Value ETF (PY US) focuses on U.S. equities that provide consistent "shareholder yield" through dividends, net buybacks, and strong free cash flow [1] Investment Process - The investment process targets liquid, seasoned issuers with adequate float and trading depth to support capacity [1] - A rules-driven, fundamental overlay is applied, emphasizing cash generation, payout sustainability, and balance-sheet discipline [1] Scoring and Exclusions - Eligible companies are scored based on cash flow coverage, dividend growth consistency, and net repurchase activity [1] - Companies with deteriorating quality and impaired liquidity are excluded from the portfolio [1] Portfolio Construction - The portfolio emphasizes large and mid-cap stocks, diversified across various sectors [1] - Issuer weights are constrained to reduce single-name concentration and maintain rebalancing flexibility [1] Position Sizing and Management - Position sizing reflects factor balance and valuation bands, with trims occurring when payout quality weakens, leverage increases, or buyback effectiveness declines [1] - Reconstitution and rebalancing are systematic but allow for manager discretion to manage turnover and trading costs [1]