ETF glossary
Short, plain-English definitions for the terms used throughout our ETF pages — what an ETF is, how it tracks an index, and how its price works.
- ETF (exchange-traded fund)
A fund that holds a basket of assets (stocks, bonds or commodities) and trades on a stock exchange all day, like a share, instead of being priced once a day like a traditional mutual fund.
- Index tracking
Most ETFs are passively managed: they try to match the return of a specific index (such as the S&P 500) by holding the same securities in similar proportions, rather than a manager picking stocks.
- Actively managed ETF
A smaller category of ETF where a manager picks and changes holdings at their own discretion, instead of simply tracking a fixed index. Its return can differ a lot from the broad market.
- Expense ratio
The yearly fee a fund charges its holders, shown as a percentage of the amount invested and deducted automatically from the fund's assets — it is not billed separately.
- Net asset value (NAV)
The value of everything an ETF holds, divided by its number of shares. The market price you see can trade slightly above or below NAV during the day.
- Underlying holdings
The actual stocks, bonds or other assets a fund owns. Holdings and their weights change over time as the fund rebalances to match its strategy or index.
- Sector fund
An ETF built around one slice of the economy — such as energy, technology or financials — instead of the whole market. It tends to be more volatile than a broad index fund.
- Covered-call ETF
An ETF that holds a basket of stocks and also sells call options against them to generate extra income, usually giving up some upside in strong rallies in exchange for steadier cash distributions.
- Dividend yield (fund-level)
How much a fund has distributed to holders over a period, as a percentage of its price. We do not publish this number for ETFs on this site yet — check the fund manager's own page.
- Ticker symbol
The short code used to identify a fund on an exchange, such as VOO or QQQ. The same ticker can sometimes exist on more than one exchange, so quote widgets add an exchange prefix to avoid ambiguity.