ETFs Glossary

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Three-year annualized return

The average return each year over a three-year period. Takes into consideration the reinvestment of capital gains and dividends as well as price changes.

Ticker

Abbreviation used by brokerage firms to identify fund easily. Every ETF has one.

Total net assets

Indicates the total amount of assets, including cash, that a fund holds as of a certain date.

Tracking error

Percentage amount a fund's assets deviate from its benchmark index. This should be quite small.

Transparency

Refers to the visibility level of securities holdings within a given portfolio or fund. Generally, the transparency of an index fund will be greater than an actively managed fund. This is due to the fact that holdings within an index fund are openly disclosed and available.

Turnover

A measure of a fund's trading history that is expressed as a percentage. A fund with a 100% turnover generally changes the composition of its entire portfolio each year. A low turnover figure (20% to 30%) would indicate a buy-and-hold strategy. High turnover (more than 100%) would indicate an investment strategy involving considerable buying and selling of securities. Funds with higher turnover incur greater brokerage fees for affecting the trades. They also tend to distribute more capital gains than low-turnover funds, because high-turnover funds are constantly realizing the gains. A change in a fund's general turnover pattern can indicate changing market conditions, a new management style or a change in the fund's investment objective.