Administrator - The firm responsible for coordinating 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 Volume - The mean of the number of ETF shares traded per day over any given
period; although not necessarily indicative of an ETF's liquidity.
Beta - An ETF's 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 at which 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.
Exchange Traded Fund (ETF) - An Exchange Traded Fund (ETF), a specific type of index
fund, is a basket of securities that can be purchased and sold as an individual stock. ETFs
seek to closely track and replicate the results of market benchmarks such as like the S&P
500 or the Dow Jones Industrial Average. ETFs are regulated by the Securities and Exchange
Commission.
Expense Ratio - A percentage of assets paid by shareholders to cover the expenses of
managing the fund. ETF expense ratios are normally less than comparable mutual funds.
Inception Date - A mutual fund or ETF's first day of trading, when its performance
is first recorded.
Index Fund - A fund that holds a portfolio of securities identical or nearly identical
to those comprising a market index, like the Dow Jones Industrial Average or the S&P 500,
in order to match the performance of that index.
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.
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Model Portfolio - A diversified portfolio of ETFs that represents an investment strategy
based on an investor's risk tolerance and time-horizon
requirements.
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.
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).
Risk Tolerance - Your level of comfort with the possibility that the value of
investments may decline in the pursuit of greater gains. An investor who has a lower risk
tolerance might select a more stable portfolio than one who has a high risk tolerance.
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.
Time Horizon - The length of time you plan on keeping funds invested.
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 less turnover than comparable "active" funds because they track
indexes that do not frequently buy or sell stocks.
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