Beta
How sensitive an ETF is to broad equity-market moves. Beta is useful for portfolio balance, not as a quality score.
Core metrics
Risk-adjusted return
Sharpe ratio
Return per unit of total volatility. Helpful for comparing broad funds with similar jobs, less useful across very different sleeves.
Downside focus
Sortino ratio
Like Sharpe, but cares more about bad volatility than total volatility. Useful when the drawdown profile matters more than the wiggles.
Cost
OCF
Ongoing Charges Figure. A good starting cost metric, but not the whole ownership cost once spread and tracking difference matter.
Cashflow
Distribution yield
Useful only when the income stream is the real job. Never treat a high yield as proof that the fund is better.
Bond risk
Duration
How sensitive a bond ETF is to interest-rate moves. Longer duration usually means more rate sensitivity.
Structure and implementation terms
Tracking
Tracking difference
The real gap between the fund return and the index return. In practice this often matters more than obsessing over a tiny OCF difference.
Tracking
Tracking error
How consistently the fund deviates from the benchmark over time. Relevant when precision is the job.
Structure
Physical vs synthetic
Physical funds hold the assets directly or through sampling. Synthetic funds use swaps. Neither is automatically bad; the question is whether you understand the structure.
Currency
Hedged vs unhedged
Hedging changes the ride. It is not a free lunch: you are trading currency noise for hedging cost and a different return path.
Cashflow
Accumulating vs distributing
Share-class choice changes cashflow handling, tax admin and rebalancing convenience, even when the underlying portfolio is similar.
Fund scale
AUM
Assets under management. Bigger is not always better, but tiny specialist funds deserve a closure-risk check.