ETFs & Index Investing

An ETF where portfolio managers actively select and trade securities to outperform a benchmark, combining active management with the trading flexibility of ETFs.

A large institutional entity authorized to create and redeem ETF shares directly with the fund issuer, maintaining price alignment between ETF market price and NAV.

An ETF that invests in a portfolio of bonds, providing diversified fixed-income exposure with the trading flexibility of a stock.

An ETF that uses options strategies to provide downside protection (a "buffer") while capping upside potential over a defined outcome period, typically one year.

An index where each stock's weight is proportional to its total market capitalization, meaning larger companies have a bigger impact on index performance.

An investment fund with a fixed number of shares that trade on exchanges, often at premiums or discounts to their net asset value.

An ETF that provides exposure to physical commodities like gold, oil, or agricultural products, either through futures contracts, physical holdings, or commodity producer stocks.

An ETF that holds a portfolio of stocks and sells (writes) call options on those holdings to generate premium income, enhancing yield at the cost of capped upside.

The ETF mechanism where authorized participants exchange baskets of underlying securities for ETF shares (creation) or ETF shares for underlying securities (redemption).

An ETF that focuses on stocks with above-average dividend yields or consistent dividend growth histories, designed to generate regular income.

An index where each constituent stock receives the same allocation weight regardless of market capitalization, giving smaller companies the same influence as larger ones.

An ETF that selects or weights investments based on Environmental, Social, and Governance criteria, screening out companies that don't meet sustainability standards.

The difference between an ETF's market trading price and its net asset value (NAV), expressed as a percentage.

A basket of securities that trades on an exchange like a stock, offering diversification with the flexibility of intraday trading.

The annual fee charged by a fund as a percentage of assets under management, covering operating costs like management, administration, and marketing.

An investment fund that holds a portfolio of other funds rather than individual securities, providing diversification across multiple fund managers and strategies.

An ETF focused on companies with above-average revenue and earnings growth potential, typically in sectors like technology, healthcare, and consumer discretionary.

The exchange of securities (rather than cash) between an authorized participant and an ETF issuer during the creation or redemption of ETF shares.

A passive strategy that aims to match market returns by holding all securities in a market index in proportion to their weights.

An ETF that invests in stocks or bonds from countries outside the United States, providing geographic diversification across developed and emerging markets.

An exchange-traded fund designed to deliver the opposite return of its benchmark index, used for hedging or speculating on market declines.

An ETF that uses financial derivatives and debt to amplify the daily returns of an underlying index, typically by 2x or 3x.

The per-share value of a fund calculated by subtracting total liabilities from total assets and dividing by the number of outstanding shares.

An ETF that invests in Real Estate Investment Trusts (REITs), providing diversified exposure to real estate sectors like residential, commercial, industrial, and healthcare properties.

A fund that tracks the S&P 500 index by holding all 500 large-cap US stocks in proportion to their market capitalization.

An index fund management technique where the fund holds a representative subset of index constituents rather than every single security in the index.

An ETF that invests exclusively in companies within a specific industry sector, such as technology, healthcare, energy, or financials.

The practice where a fund temporarily loans its holdings to borrowers (typically short sellers) in exchange for collateral and a lending fee that can offset fund expenses.

An ETF that uses alternative index construction rules based on factors like value, momentum, quality, or low volatility instead of traditional market-cap weighting.

An ETF that uses derivative contracts (typically total return swaps) rather than physical securities to replicate the performance of its benchmark index.

The structural advantage ETFs have over mutual funds in minimizing taxable capital gains distributions to shareholders, primarily through the in-kind creation/redemption process.

An ETF focused on a specific investment theme or trend — such as artificial intelligence, clean energy, or cybersecurity — rather than a traditional sector or index.

A broad market index that aims to represent the entire investable stock market of a country or region, including large, mid, small, and micro-cap stocks.

The difference between an index fund's or ETF's performance and the benchmark index it aims to replicate, measured as standard deviation of return differences.

A fixed portfolio of securities that is assembled once, held for a predetermined period, and then terminated — with no active management or rebalancing during its life.

An ETF that focuses on stocks considered undervalued relative to their fundamentals, using metrics like low price-to-earnings, price-to-book, and high dividend yields.

The world's largest mutual fund company, founded by John Bogle in 1975, pioneering low-cost index investing with a unique investor-owned structure.

A single, all-inclusive fee charged by a financial advisor or brokerage that bundles portfolio management, trading commissions, and administrative services into one annual percentage.