Market Capitalization Definition

Learn the definition of market capitalization and other ETF terminology from the etf.com glossary.

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Reviewed by: etf.com Staff
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Edited by: etf.com Staff

Learn more about Market Capitalization

Market Capitalization, a pivotal concept in ETFs, encapsulates the aggregate market value of a fund's outstanding shares. Calculated by multiplying the number of shares by the current market price per share, it determines the size and scale of an ETF within the broader financial landscape. ETFs are often categorized based on market capitalization, with distinctions between large-cap, mid-cap, and small-cap funds. Market capitalization serves as a fundamental metric guiding investors in tailoring their portfolios to different risk-return profiles, reflecting the diverse opportunities and characteristics inherent in companies of varying sizes.

Related Terms

ETF Glossary is etf.com’s collection of key terms and definitions related to exchange-traded funds. ETFs are investment funds that are traded on stock exchanges, and they can encompass a wide range of asset classes, including stocks, bonds, commodities and more. Given the diverse range of ETFs and the complexity of financial markets, having a clear understanding of ETF-related terminology is instrumental for investors looking to make informed decisions, manage risks effectively and navigate the evolving landscape of ETF investments.