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From Theme to Product – How LIXX Builds an Index
21. October 2025 | Info

From Theme to Product – How LIXX Builds an Index

Artificial intelligence, drone technology, and quantum communication – these are not just buzzwords, but pillars of a rapidly evolving investment universe. At LIXX, we transform such themes into tradable indices. This article offers a behind-the-scenes look at how the Next-Gen Defence Innovators Index was created, and what makes it stand out in a crowded market of benchmarks.
LIXX operates with an open architecture model - collaborating with a range of specialized partners to ensure flexibility, speed, and the best possible fit for each project. For the Next-Gen Defence Innovators Index, our chosen partner is Impact Cubed.

Impact Cubed combines granular, outcome-based ESG data and investment research with deep quantitative expertise to deliver precise thematic exposures. By aligning risk, return, and impact, they provide the insights and expertise needed to build resilient, investable indices in strategically important themes such as defense innovation.

1. From Market Impulse to Product Idea

The idea for the Next-Gen Defence Innovators Index originated from a clear investor demand: access to companies that are not just part of the defense industry, but actively transforming it. Our approach is neutral and thematic – we do not take political positions. Instead, we offer a transparent, rules-based product for investors who believe in the growth potential of defense innovation.

2. Thematic Precision Through Strategic Domains

Rather than relying on broad industry classifications, we focus on five clearly defined innovation domains:

  • Artificial Intelligence
  • Cybersecurity
  • Autonomous Systems
  • Drones / UAVs
  • Quantum Applications

Only companies with substantial activity in at least three of these areas are eligible. This ensures a focused, forward-looking universe.

3. Innovation as a Filter – Not a Buzzword

A central criterion is R&D intensity: only companies with an R&D-to-revenue ratio above 5% are included. This guarantees that we capture true technology leaders, not legacy players with minimal innovation.

4. Geographic Relevance Beyond the US

The index focuses on the EU27, UK, Switzerland, Norway, Israel, and Turkey – strategically relevant markets outside the US. This provides diversification and access to Europe’s growing defense tech ecosystem.

5. Rulebook, Weighting, Governance

Constituents are weighted by free-float market capitalization with a 20% cap per company. Excess weight is redistributed pro-rata. The methodology is transparent, rules-based, and compliant with EU Benchmark Regulation and IOSCO principles.

6. What Comes Next?

A second index is already in development, focusing on dual-use technologies – companies whose products are used in defense contexts without being defense firms themselves. This requires careful communication and partner alignment.

Conclusion

An index is more than a list – it is a statement about how to make the future investable. At LIXX, we combine technological depth with regulatory clarity and thematic precision to create products that are not only relevant, but also responsible.