Approach

A democracy weighted portfolio

An Exclusive Partnership

Democracy Investments holds an exclusive license agreement with the publisher of "The Economist," The Economist Group, LTD, for the use of their Democracy Index for financial products globally. In our view, the Economist’s Democracy Index is the most respected, objective, and transparent measure of democracy in the world.

Democracy Investments Methodology

The Index uses a “passive management” (or indexing) approach to achieve its investment objective to track the Democracy Investments International Index.

All World Ex US Index
Starting Universe

The starting universe is the Solactive GBS Global Markets ex United States Large & Mid Cap USD Index (market cap weighted, international equities) which consists of 2200 securities in 54 countries.

EIU Democracy Index
Exclusive License Overlay

Each security is assigned a "country of risk" as categorized by Refinitiv. The EIU Democracy Index score is then applied to each security by "country of risk" and normalized.

Democracy Investments International Index®
New Democracy Weighted Index

Our proprietary methodology results in a new index that is the product of market capitalization and democracy scores, resulting in higher weights in democratic countries and lesser weights in authoritarian states.

The Index is rebalanced and reconstituted on a quarterly basis.

The Democracy Index, produced annually by The Economist Intelligence Unit, is a robust, independent measure of the state of democracy globally. Our index provides a comprehensive picture of trends in democracy across 167 countries, allowing comparisons across countries and between time periods since the start of the index in 2006.

Despite the global "democracy recession" of recent years, 68 countries have improved their scores over the lifetime of the index, most of them in Asia, Latin America and Sub-Saharan Africa. This shows that democratic progress is possible even when the overall global trend is one of decline.

Joan Hoey
Editor, The Democracy Index
To see this year's winners and losers, download the latest Democracy Index here.

About The Democracy Index

Index Methodology

The Economist Intelligence Unit’s index of democracy, on a 0 to 10 scale, is based on the ratings for 60 indicators, grouped into five categories:

  1. Electoral process and pluralism
  2. Civil liberties
  3. The functioning of government
  4. Political participation
  5. Political culture

Each category has a rating on a 0 to 10 scale, and the overall Index is the simple average of the five category indexes. The category indexes are based on the sum of the indicator scores in the category, converted to a 0 to 10 scale.

Adjustments to the category scores are made if countries do not score a 1 in the following critical areas for democracy:

  1. Whether national elections are free and fair.
  2. The security of voters.
  3. The influence of foreign powers on government.
  4. The capability of the civil service to implement policies.

If the scores for the first three questions are 0 (or 0.5), one point (0.5 point) is deducted from the index in the relevant category (either the electoral process and pluralism or the functioning of government). If the score for 4 is 0, one point is deducted from the functioning of government category index.

60 Indicators in the Country Democracy Scores

  • Free elections
  • Fair elections
  • Municipal elections
  • Universal suffrage
  • Security voters
  • Campaigning
  • Party finances
  • Government transfers
  • Free parties
  • Opposition
  • Access to office
  • Civic organisations
  • Reps and government
  • Legislature
  • Checks and balances
  • Military
  • Foreign powers
  • Interest groups
  • Accountability
  • Territory
  • Transparency
  • Corruption
  • Civil service
  • Citizens’ control
  • Confidence in government
  • Confidence in pol parties
  • Voter turnout
  • Minorities
  • Women
  • Membership
  • Engagement
  • Demonstrations
  • Literacy
  • Follow politics
  • Promotion
  • Social cohesion
  • Role of leaders
  • Military rule
  • Experts’ rule
  • Democracy & order
  • Democracy and economy
  • Perceptions of democracy
  • Church & state
  • Electronic media
  • Print media
  • Free expression
  • Diversity
  • Internet
  • Trade unions
  • Petitions
  • Torture
  • Judiciary
  • Religion
  • Equality law
  • Basic security
  • Private property
  • Personal freedom
  • Respect for human rights
  • Discrimination
  • New threats

Relevant Democracy Index Scores

Norway9.81
New Zealand9.61
Sweden9.39
Finland9.30
Denmark9.28
Ireland9.19
Switzerland9.14
Netherlands9.00
Taiwan8.92
Luxembourg8.81
Germany8.80
Canada8.69
Australia8.66
Japan8.40
United Kingdom8.28
Austria8.28
Greece8.14
South Korea8.09
France8.07
Spain8.07
Chile7.98
Czech Republic7.97
Israel7.80
Portugal7.75
Italy7.69
Belgium7.64
Malaysia7.29
India7.18
Poland7.18
South Africa7.05
Hungary6.72
Brazil6.68
Philippines6.66
Colombia6.55
Indonesia6.53
Thailand6.35
Singapore6.18
Papa New Guinea6.03
Peru5.81
Hong Kong5.24
Mexico5.14
Turkey4.33
Qatar3.65
Pakistan3.25
UAE3.01
Egypt2.93
Russia2.22
China2.12
Saudi Arabia2.08

Source: The Economist’s Democracy Index (2023) as of Feb 2024; the US score is 7.85 but is not included since out of scope for our All-World Ex-US Index.

See the results of using this methodologyLearn how the Democracy Investments Index makes it all possible.

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