# A
Assets Under Management (AUM)
Assets under management (AUM) is the total current market value of all the investments held by an ETF or fund, representing the combined dollar amount of money that investors have placed in that fund.
# B
Bid-Ask Spread
The bid-ask spread is the difference between the highest price a buyer is willing to pay for an ETF share (the bid) and the lowest price a seller is willing to accept (the ask), representing an implicit trading cost paid each time you buy or sell.
# D
Dividend Yield
Dividend yield is the annual income an ETF distributes to shareholders — expressed as a percentage of the ETF’s current share price — calculated by dividing the total dividends paid over the past 12 months by the current price per share.
# E
Ex-Dividend Date
The ex-dividend date is the first day on which a buyer of an ETF share is no longer entitled to receive the next scheduled dividend distribution — meaning only investors who owned the ETF before this date will receive the upcoming payment.
Expense Ratio
An expense ratio is the annual fee that an ETF or mutual fund charges to cover its operating costs, expressed as a percentage of the fund’s total assets and automatically deducted from the fund’s returns.
# I
Index Fund
An index fund is a type of investment fund — available as an ETF or mutual fund — that is designed to replicate the performance of a specific market index by holding the same securities in the same proportions as that index.
# M
Market Capitalization Weighting
Market capitalization weighting is a method of constructing an index or ETF portfolio in which each company’s share of the fund is proportional to its total stock market value — meaning larger companies receive bigger allocations than smaller ones.
# N
Net Asset Value (NAV)
Net asset value (NAV) is the per-share value of an ETF calculated by dividing the total market value of all the fund’s holdings — minus any liabilities — by the number of shares outstanding.
# T
Total Return
Total return is the complete gain or loss from an investment over a given period, combining both the change in the investment’s price and any income — such as dividends or interest — received during that period, with distributions assumed to be reinvested.
Tracking Error
Tracking error is the difference between an ETF’s actual returns and the returns of the benchmark index it is designed to replicate, typically measured as the annualized standard deviation of those daily return differences.