The Hammer Index® employs a multi-factor scoring model — the Hammer Score (H_S) — to evaluate, rank and weight the top 500 artists within each index segment. The complete calibration algorithm is proprietary and held in confidence; the following represents a research-quality disclosure of the methodological framework consistent with institutional index standards.

P_adj — Price Velocity (α-weighted). Measures realised auction price performance relative to the segment benchmark, normalised for lot-level heterogeneity using a hedonic regression framework. Works are decomposed by medium, size, period and condition grade. Price signals are computed on a rolling 24-month window to reduce event-driven noise while preserving structural trend information.

R_score — Rarity Index (β-weighted). Quantifies supply scarcity across three dimensions: (i) catalogue raisonné completeness ratio, (ii) estimated works in permanent institutional collections (ineligible for secondary sale), and (iii) trailing 5-year lot-to-estimate supply ratio. Artists with <3% of known works in active circulation receive a maximum rarity premium. This factor is the primary differentiator of the Old Masters segment versus Contemporary.

V_liq — Liquidity Depth Score (γ-weighted). Composite of transaction velocity (lots sold per quarter, annualised), bid depth (number of registered bidders per lot, sourced from proprietary auction intelligence), and days-to-sale probability for works at the £500k+ threshold. Liquidity scoring is computed cross-sectionally within each segment; an artist ranked 1st on liquidity in H.IDX-HERITAGE may score significantly below the H.IDX-FRONTIER median. This prevents cross-segment contamination in portfolio benchmarking.

M_mom — Market Momentum (δ-weighted). 12-month price momentum, orthogonalised against broad art-market beta to isolate idiosyncratic artist-level signals. Momentum is capped at ±2σ to limit composition distortion from single outlier events (e.g. estate sales, record auction results).

I_inst — Institutional Endorsement (ε-weighted). Captures museum acquisition activity, retrospective frequency, auction guarantee usage and gallery-tier representation (Primary Gallery Tier scoring: I–IV). Institutional endorsement is the primary signal for long-horizon index stability and is given elevated weighting in the HERITAGE and BLUE segments where liquidity signals are inherently lower frequency.

Factor weights (α, β, γ, δ, ε) are calibrated quarterly using a proprietary constrained optimisation routine and are not publicly disclosed. Index rebalancing occurs semi-annually. The top 500 constituents per segment are evaluated on a trailing 12-month basis using the composite H_S. This document represents a summary disclosure; the full methodology is available to licensed institutional subscribers under NDA.