Investing isn’t magic—it’s math. Markets reward adaptability, discipline, and systematic thinking. That’s why our ETFs are built on financial science, not stories—leveraging volatility, diversification, and rebalancing to optimize risk-adjusted returns
This glossary cuts through the jargon, giving you the key terms that shape our investment process. If you’re here, you’re not just an investor—you’re an optimizer. For deeper insights, visit IntechETFs.com.
Let’s rethink what’s possible.
30-Day Average Dollar Volume
The average daily dollar value of ETF shares traded over the past 30 days, providing insight into liquidity and investor activity.
30-Day Average Share Volume
The average number of ETF shares traded daily over the past 30 days, helping assess trading consistency.
30-Day Median Bid/Ask Spread
The median difference between the bid and ask prices over the past 30 trading days, indicating an ETF’s liquidity and trading efficiency.
Active Management
A strategy where portfolio managers make investment decisions to outperform a benchmark. Intech follows a systematic approach rather than discretionary stock-picking process.
Alpha
The excess return of a portfolio relative to a benchmark.
Authorized Participant (AP)
A financial institution responsible for creating and redeeming ETF shares, helping maintain price stability and liquidity.
Beta
A measure of a security’s sensitivity to market movements. A beta of 1.0 means the security moves in line with the market.
Bid-Ask Spread
The difference between the highest price a buyer is willing to pay and the lowest price a seller will accept. A narrower spread suggests better liquidity
Creation/Redemption Process
The ETF mechanism that allows APs to create or remove shares, keeping ETF prices close to Net Asset Value (NAV).
Correlations
The relationships between stocks that allow investors to identify combinations that potentially reduce risks and enhance diversification within a portfolio.
Diversification
The practice of spreading investments across assets to reduce risk.
Diversification-Weighted Indexing
An approach that adjusts stock weights to balance risk and return contributions while maintaining broad market exposure.
Dividend Yield
The annual dividends paid by a security, expressed as a percentage of the security’s price.
ETF (Exchange-Traded Fund)
A pooled investment fund that trades like a stock, offering intraday liquidity.
Gross Expense Ratio
The total cost of managing an ETF, including all operating expenses, before any fee waivers or reimbursements.
Net Expense Ratio
The actual cost paid by investors after applying any fee waivers or reimbursements, providing a clearer picture of an ETF’s ongoing expenses.
Factors
Broad, persistent drivers of risk and return in equities. Common equity factors include Value, Size, Momentum, Quality, Yield, and Low Volatility.
Factor Investing
A strategy that seeks to capture excess returns by targeting specific investment factors. Factor investing can be single-factor or multi-factor and implemented using passive (rules-based) or active (discretionary) approaches.
Fundamental Model
A quantitative framework used to quantify stock effects on portfolio growth that includes financial characteristics such as valuation, profitability, and market sentiment.
Information Ratio
A measure of risk-adjusted return that compares excess return to benchmark-relative volatility (tracking error). It evaluates a manager’s ability to generate consistent outperformance
Liquidity (ETF)
The ability to buy or sell an ETF without significantly impacting its price. It depends on trading volume, authorized participants (APs), and the liquidity of its underlying holdings.
Liquidity Risk
The risk that an asset cannot be quickly bought or sold at market value without a major price impact.
Market Capitalization
The total market value of a company’s outstanding shares, calculated as stock price × total shares outstanding.
Market Order vs. Limit Order
Market orders execute immediately at the best available price, while limit orders allow investors to set price thresholds for execution.
Modern Portfolio Theory (MPT)
A framework developed by Harry Markowitz, emphasizing diversification as a way to optimize risk-adjusted returns through efficient portfolio construction.
Net Asset Value (NAV)
The per-share value of an ETF’s holdings, calculated as (Total Assets – Liabilities) / Shares Outstanding.
Portfolio Effects
The component of portfolio growth driven by interactions between stocks, primarily influenced by volatility. It quantifies how diversification and systematic rebalancing contribute to overall portfolio performance.
Price-to-Book (P/B) Ratio
A valuation metric comparing a stock’s market price to its book value.
Price-to-Earnings (P/E) Ratio
A valuation metric comparing a stock’s price to its earnings per share.
Rebalancing Premium
The incremental return potential from systematically reallocating portfolio weights based on market movements.
Return on Equity (ROE)
A measure of a company’s profitability relative to shareholder equity.
R-squared
A number between 0 and 100% that shows how closely an ETF follows its benchmark. A higher number means the ETF moves similarly to the benchmark, while a lower number means it behaves differently.
S&P 500® Index
A widely recognized stock market index that tracks 500 of the largest U.S. publicly traded companies. It serves as a benchmark for large-cap equity performance in the U.S. market.
S&P MidCap 400® Index
An index that represents 400 mid-sized U.S. companies, providing a measure of the performance of mid-cap stocks, which can offer a balance between growth potential and stability.
S&P SmallCap 600® Index
A stock index covering 600 smaller U.S. companies, designed to track the performance of small-cap stocks that often have higher growth potential but also greater volatility.
S&P 1000® Index
A combination of the S&P MidCap 400® and S&P SmallCap 600® indices, representing U.S. mid- and small-cap stocks. It provides a broad measure of the performance of companies outside the S&P 500®.
S&P Composite 1500® Index
A broad market index that combines the S&P 500®, S&P MidCap 400®, and S&P SmallCap 600® indices. It represents approximately 90% of U.S. market capitalization and is designed to reflect the overall performance of the U.S. equity market
Sharpe Ratio
A measure of risk-adjusted return that compares excess return to total volatility. It helps investors assess whether higher returns justify higher risk.
Standard Deviation
A measure of return variability, where higher values indicate greater risk.
Stochastic Portfolio Theory
A mathematical framework pioneered by Intech founder, Dr. E. Robert Fernholz, recognizing that volatility and rebalancing are potential sources of return.
Stock Effects
The portion of portfolio growth driven by individual stock returns, influenced by valuation, earnings growth, and profitability.
Systematic Rebalancing
A disciplined, quantitative approach to adjusting portfolio weights to maintain diversification.
Tracking Error
The difference between an ETF’s returns and its benchmark, measuring alignment with the index.
Trading Volume
The number of ETF shares traded in a given period, impacting liquidity and price efficiency.
Turnover Ratio
The percentage of an ETF’s holdings that change over a given period, indicating trading activity
Volatility
A measure of price fluctuations over time. Higher volatility means larger swings, while lower volatility indicates more stability.
Volatility Model
A quantitative framework analyzing historical and expected price movements (volatility) and stock relationships (correlations) to quantify portfolio effects.
Weighted Average
A calculation that assigns different levels of importance to values in a dataset, commonly applied to metrics like market capitalization, P/E ratio, and earnings growth.
The S&P 500®, S&P MidCap 400®, S&P SmallCap 600®, S&P 1000®, and S&P Composite 1500® indices are products of S&P Dow Jones Indices LLC (“SPDJI”), licensed for use by Intech. S&P®, S&P 500®, and other index names are trademarks of S&P Global, used under license. Intech ETFs are not sponsored, endorsed, or promoted by SPDJI, S&P Global, or their affiliates, which make no representation regarding investing. Indices are unmanaged, do not reflect fees, and are not available for direct investment.
This document is for informational purposes only and should not be considered investment, legal, or tax advice. The definitions provided are general in nature and may not fully capture the complexity of each concept. Investors should consult a financial professional before making any investment decisions.
While we strive for accuracy, Intech does not guarantee that all definitions are complete, up-to-date, or applicable to all investment strategies. The descriptions herein may differ from definitions used by other firms or regulatory agencies.