The ETF glossary to understand everything

A

ACR Ajout de Capital Récurrent — recurring contribution

A fixed amount added to the portfolio every month, ideally by standing order from payday. About 3% of the starting capital per month is a useful guide. See DCA.

Attack

The bench of offensive ETFs — technology, software, communication, innovation, semiconductors, crypto… — able to capture growth when markets rise. The attack share of the portfolio is spread across the eight best-ranked offensive ETFs.

B

Backtest

A simulation of how a set of rules would have behaved on past market data. Team-ETF’s backtest runs from January 2015 to June 2026, 2017 excluded. Simulated past performance is not a reliable indicator of future results.

Bench

The list of ETFs eligible for the portfolio, selected once a year. Team-ETF works with two benches: about fifteen offensive ETFs (attack) and five or six defensive ETFs (defense).

Bitcoin ETF

An ETF whose price tracks bitcoin, held in a securities account like any other ETF. It can sit on both Team-ETF benches, but its weight is capped at 20% of the portfolio because it rests on a single asset.

Bogle, John

Founder of Vanguard and creator of the first index fund in 1974. “Don’t look for the needle in the haystack. Just buy the haystack.”

Breadth

How many of the four canary ETFs currently show a negative momentum score, from 0 to 4. Breadth sets the split between attack and defense for the month.

Broker

The institution that holds your securities account and executes your orders. Team-ETF recommends Interactive Brokers or Swissquote; your own bank is possible if its fees are competitive.

C

CAGR Compound Annual Growth Rate

The annualised return: the constant yearly rate that would take the starting capital to the final value over the period. Used to compare strategies over different lengths of time.

Canary

One of four broad ETFs — LQD, EFA, EEM and AGG — used as an early-warning signal, after Keller & Keuning (2018). Each gets a weighted momentum score (12 × 1-month, 4 × 3-month, 2 × 6-month, 1 × 12-month return, divided by 19). A negative score is an alarm.

Correlation

How closely two ETFs move together. Low correlation between the ETFs on the bench is one of the five selection criteria: it is what makes diversification work.

CTO Compte-titres ordinaire

See Securities account.

D

DCA Dollar Cost Averaging

Investing a fixed amount at regular intervals regardless of the price. You buy more units when prices are low and fewer when they are high, which smooths your entry price and dilutes timing risk. Team-ETF calls it ACR.

Defense

The bench of defensive ETFs — government bonds, corporate bonds, commodities, gold, crypto — able to perform when the economy retreats. The number of defensive ETFs held equals the number of negative canaries.

Drawdown

The fall from a portfolio’s most recent peak to its current value, in percent. The measure of what an investor actually goes through during a downturn.

E

ETF Exchange-Traded Fund

A fund listed on a stock exchange and bought like a share. One ETF tracks a whole basket: an index, a sector, bonds, commodities, gold, even bitcoin. About 12,000 exist worldwide.

Expense ratio

See TER.

F

Flat tax PFU — Prélèvement Forfaitaire Unique

In France, the 30% single rate applied to gains realised in a securities account: 12.8% income tax plus 17.2% social charges. Indicative only — consult a tax adviser.

I

Index

A basket of securities whose combined value is published as one number — the S&P 500, for instance. An index cannot be bought directly; an index fund or ETF replicates it.

Index fund

A fund that replicates an index instead of trying to beat it. Created by John Bogle in 1974; the ancestor of the ETF.

ISIN International Securities Identification Number

The twelve-character code that identifies a security unambiguously. Use it to find the exact ETF on your broker, since several ETFs can share a similar name.

L

Life insurance Assurance-vie

A French savings wrapper. Gains taxed at the 30% flat tax, or 24.7% after eight years with a €4,600/€9,200 yearly allowance; only the UCITS ETFs of your contract are available. Not supported by Team-ETF at launch.

Liquidity

How easily an ETF can be bought or sold without moving its price. Team-ETF only selects ETFs trading more than €200M a month — “we only recruit in the first division”.

M

Max drawdown

The deepest peak-to-trough fall over a period. In the Team-ETF backtest 2015–2026 (2017 excluded): -15.4%, against -23.9% for the S&P 500. Simulated past performance is not a reliable indicator of future results.

Momentum

The tendency of recent winners to keep outperforming for a while. Team-ETF measures it as each ETF’s performance over the last twelve months and ranks the bench on it every month.

O

Offensive ETF

See Attack.

P

PEA Plan d’Épargne en Actions

A French equity savings plan: gains exempt while held, 17.2% social charges only after five years, €150,000 ceiling, synthetic UCITS ETFs only. Not supported by Team-ETF at launch.

PER Plan d’Épargne Retraite

A French retirement savings plan: contributions are tax-deductible, but the money is locked until retirement. Not supported by Team-ETF at launch.

PFU

See Flat tax.

R

Ranking Classement

The monthly league table of the bench, ordered by twelve-month performance. The eight best-ranked offensive ETFs make the attack pocket; the best-ranked defensive ETFs make the defense pocket.

Rebalancing

Bringing the portfolio back to its target allocation: selling the excess positions inherited from last month, buying what is missing. Done once a month — about five minutes with the Team-ETF sheet.

Regime

The attack/defense split of the month, set by breadth: 0 negative canaries → 100% attack; 1 → 75/25; 2 → 50/50; 3 → 25/75; 4 → 100% defense.

S

S&P 500

The index of the 500 largest listed US companies, and the usual benchmark for equity strategies. It fell 52% in 2008–09 and 22% in both 2020 and 2022.

Securities account CTO — compte-titres ordinaire

An account with a broker that holds shares and ETFs in your own name. Unlimited deposits, funds available at any time, all ETFs (US and UCITS) eligible, gains taxed yearly. Team-ETF launches on the securities account.

Sharpe ratio

Return per unit of risk: the strategy’s excess return divided by its volatility. Above 1 means the return was earned with comparatively little turbulence. Backtest 2015–2026 (2017 excluded): 1.17 against 0.74 for the S&P 500. Simulated past performance is not a reliable indicator of future results.

Synthetic ETF

An ETF that replicates its index through a swap with a bank rather than by holding the securities. It is what lets some ETFs on US or global indices be eligible for the PEA.

T

Target allocation

The list of ETFs and the weight each should have in the portfolio at the end of the monthly rebalancing. The Team-ETF sheet turns it into quantities to hold.

TER Total Expense Ratio

The yearly running cost of an ETF, expressed as a percentage and deducted from its price. Low fees are one of the main advantages of ETFs over actively managed funds.

Track record

The length of an ETF’s price history. Team-ETF requires at least three years, so that the twelve-month momentum can be measured on a fund that has already lived through more than one market phase.

U

UCITS Undertakings for Collective Investment in Transferable Securities

The European regulatory framework for funds sold to the public. A UCITS ETF is the version of an ETF available to investors in the European Union; US-listed ETFs are often not.

V

Volatility

The size of price swings over time, annualised. Higher volatility means a rougher ride for the same destination. Backtest 2015–2026 (2017 excluded): 17.3% against 15.8% for the S&P 500. Simulated past performance is not a reliable indicator of future results.