The Exchange-Traded Funds Manual (Frank J. Fabozzi)

With the enormous popularity and widespread acceptance of exchange-traded funds (ETFs) over the past several years, advisors and individual investors alike have sought out a definitive guide to this innovative, exciting new class of funds–and the Frank J. Fabozzi series has responded. Written by ETF expert Gary Gastineau, The Exchange-Traded Funds Manual provides a detailed description of "open-end" exchange-traded funds and how they work so that you can understand the reasons for ETF growth and, more importantly, how to use ETFs profitably.

The Exchange-Traded Funds Manual offers the most complete treatment of ETFs available, from asset allocation and risk management to taxation and financial planning, ETF selection, and evaluation. Whether you’re a long-term investor, online trader, or advisor, this volume is a useful companion to anyone who wants to use "open-end" ETFs intelligently and effectively.

This comprehensive guide begins with a brief history of ETFs and a comparison with other basket products that often compete with them, including HOLDRs and Folios. The Exchange-Traded Funds Manual continues its full examination of ETFs by going behind the scenes and below the surface for the answers to difficult questions that you need to know when investing with ETFs. You’ll learn why the expense ratios of ETFs tend to be low as well as how most equity ETFs avoid significant capital gains distributions.

In-depth analysis and comprehensive coverage will also allow you to:

• Appreciate the distinctive characteristics of ETFs
• Understand ETFs as an investor or investment advisor
• Compare equity index ETFs
• Prepare for new generations of ETFs
• Trade ETF shares with confidence
• Develop an investment plan incorporating ETFs
• Accurately analyze and compare ETFs

The Exchange-Traded Funds Manual goes beyond the basic, introductory facts of ETFs, namely their flexibility, low cost, and high tax efficiency. This book provides a broader perspective and a more useful frame of reference for the risks and rewards of common ETF investment strategies and tactics. Filled with proven techniques and real-world examples to back them up, The Exchange-Traded Funds Manual is the only book you’ll ever need to understand and profit from the incredible class of financial instruments known as exchange-traded funds.

Praise for the exchange-traded funds manual

"Exchange-traded funds are the hottest finance innovation of the past decade. Gary Gastineau, who played a critical role in their development, demystifies the working of these instruments, lucidly describes their advantages and disadvantages, and guides investors on their use. This gem of a book will be the ETF bible for years to come."

–Burton Malkiel, Chemical Bank Chairman’s Professor of Economics, Princeton University

"This is the first comprehensive book on exchange-traded funds.The author displays an institutional and practical knowledge of exchange-traded funds that makes this book necessary reading for not only the knowledgeable investor but for the professional researcher seeking to understand these relatively new investment vehicles."

–Martin J. Gruber, Nomura Professor of Finance

Stern School of Business, New York University

"Gary Gastineau is a national treasure. Exchange-traded funds are the wave of the future, and Gary has been instrumental in their development from day one. His knowledge is encyclopedic, and his style and subtle humor make it all accessible to the reader."

–Wayne H. Wagner, Chairman, Plexus Group, Inc.

"In Gary Gastineau’s brilliant work in illuminating the reader on exchange-traded funds, he provides rich insights into the process and methodology of adding value and cites a convergence of market forces that creates a compelling story for the use of ETFs for those who choose to add value."

–Stephen C. Winks, Publisher, Senior Consultant

"The introduction of exchange-traded funds was one of the success stories of

Wall Street in the 1990s. Gary Gastineau was a key contributor to this success, and his book is an important benchmark on both the current status of this important new category and the vast potential of its next-generation products."

–Salvatore Sodano, Chairman and Chief Executive Officer

American Stock Exchange

This is the most comprehensive book on Exchange-Traded Funds that can be written at this time. It describes and, more importantly, analyses the principal features of the ETFs that are available today and compares them with their major competitors such as conventional mutual funds, HOLDRs and Folios. It offers a clear picture of the markets and concrete suggestions for order entry and execution at minimal cost. Rather than pages of examples of applications which cover what might have been if you could have purchased the book before it was written, the applications chapter stresses principles that should be useful indefinitely to an investor, advisor or analyst who wants to develop an appropriate position for a contemporary market situation.

GARY L. GASTINEAU is a Managing Director at Nuveen Investments, where he is responsible for the development and introduction of Nuveen's new open-end exchange-traded funds. Gastineau has specialized in the development and use of financial instruments for portfolio and risk management applications since 1975. Prior to joining Nuveen in March 2000, he was senior vice president for new product development at the American Stock Exchange, where he worked on the development of exchange-traded funds and related products.

About the Author.

Preface.

Acknowledgements.

Introduction.

The History and Structure of ETFs--and Some Competitors.

The Regulatory Structure and Mechanics of the Open ETF.

Distinctive Characteristics of Exchange-Traded Funds: Transactions, Shareholder Protection, Payment for Value Added, Fund Evaluation, and Taxation.

ETF Applications for Investors and Investment Advisors.

Equity Index ETFs--A Long Way to Go.

New Generations of ETFs.

Trading ETF Shares Without Angst.

Developing an Investment Process Incorporating ETFs.

Appendix: Getting Information on ETFs--Where to Look and What to Look For.

Glossary.

Bibliography.

Index.