ETF Glossary
Administrator – The firm responsible for assisting in reporting and communication with investors and regulators.
Asset Class – The broad investment categories in a portfolio; for example bonds, U.S. equities, real estate, precious metals, cash, etc.
Avg Daily Vol – The mean of the number of ETF shares traded per day over any given period; although not necessarily indicative of an ETFs liquidity.
Beta – An ETFs level of variability of returns, in relation to a market index, usually the S&P 500 index. For example, ETFs with a beta over 1.0 are more volatile than the index, while those with a beta of less than 1.0 are less volatile.
Dividend Amount – A distribution of earnings to shareholders of a corporation or an exchange-traded fund.
Dividend Rate – The rate a fund distributes dividend and interest income earned on investments, usually expressed as cents per share.
Ex-Dividend Date – The day when a fund’s net asset value (NAV) is decreased by the amount of the dividend being paid out. When a fund is trading ex-dividend, a purchaser is not entitled to the distribution.
Expense Ratio – A percentage of assets paid by shareholders to cover the expenses of managing the fund. ETF expense ratios are normally significantly less than comparable mutual funds.
Inception Date – A mutual fund or ETFs first day of trading, when its performance is first recorded.
Investment Policy – A fund’s stated strategy that explains how and where it will invest; examples include small-cap growth funds, emerging markets funds, technology sector funds, and corporate bond funds.
Management – The firm responsible for the day-to-day portfolio operations, which includes adjusting for index changes, managing cash flows, and other functions.
Market Cap – A public company’s share price multiplied by the total number of shares outstanding; Microsoft is an example a large-cap company.
Market Cap Classification – Usually defined as small-cap, mid-cap, and large-cap securities; although the boundaries are not standardized because mutual funds and market indexes often define them differently.
NAV – Net Asset Value; calculated by summing the fund’s assets, subtracting operating costs and other liabilities, and dividing by the total number of shares outstanding.
Net Assets – Indicates the amount of investor cash held in a fund; like a stock, determined by the net asset value (NAV) of an share multiplied by the number of shares outstanding.
P/B – Price to book ratio, another measure of valuation. Book value is the net worth of a company or its total assets.
P/E – Price to earnings ratio, a common measure of valuation. For ETFs, the P/E is the weighted average P/E ratio of the stocks in the portfolio.
Primary Exchange – The exchange on which an ETF was originally listed, although exchanges trade competitor ETFs through unlisted traded privileges (UTP).
Sector Allocation – The amount that an ETF invests in particular industry slices, such as technology, utilities, consumer staples, healthcare, etc. Broad market index ETFs are diversified across industries, while sector ETFs concentrate on particular industries.
Shares Outstanding – In relation to ETFs, the number of shares held both long and short by investors.
Style – Commonly thought of as the distinction between value and growth, both in funds and individual stocks. Growth stocks generally have higher valuations and volatility than their beaten-down value counterparts that tend to have more consistent earnings and dividends.
Top 10 Holdings – The ten securities that a fund's portfolio is most heavily invested in; commonly used as a quick approximation of the fund’s diversification level.
Turnover– The level of trading in a fund's portfolio, often expressed as a percentage of assets. ETFs usually have fewer turnovers than actively managed funds because they track indexes and therefore do not frequently buy or sell stocks.