Synopses & Reviews
Since the early 1990s when exchange traded funds (ETFs) first appeared on the financial landscape, many investors knew what they were, but few understood the full potential of these investment vehicles. Exchange Traded Funds fills this gap to both educate and dispel the myths associated with this popular new index product.
Written by the experts at Indexfunds.com, this comprehensive guide thoroughly examines how ETFs make investing money in equity indexes easy, direct, and inexpensive. Whether you're in the market for long-term gains or short-term profits, Exchange Traded Funds will show you how lower costs, greater tax efficiencies, and superb liquidity make ETFs the perfect tool for index investments.
Providing a clear definition of ETFs and a brief history of how they originated in the receipt-based commodities markets, this book sets the groundwork for any investor looking to ETFs for a reliable investment option. Understand the internal workings of this unique financial instrument and discover the different types currently offered, including SPDRs, iShares, Diamonds, QQQs, HOLDRs, and many more.
Exchange Traded Funds also compares the fees and performances of ETF index funds to traditional mutual funds, and lets you decide which fits your needs best. For the individual long-term investor, typical scenarios are reviewed-including the creation of a basic retirement portfolio, diversification with international and small company ETFs, avoiding duplication, and betting on sectors-so you can make the most out of your investment.
With an overview of how institutional investors use ETFs to help control risk, manage exposure, and soften the effects of fund management transitions, you can use proven professional advice to balance your own portfolio.
Various strategies, plans, and portfolios allow you to evaluate, buy, and sell ETFs while exploring how they actually work. Charts and graphs examine the most interesting developments in ETFs that have occurred abroad, from Canadian ETFs based on Canadian Government bonds to government-sponsored Hong Kong TraHKs and actively managed ETFs in Germany. The scope of ETFs has become enormous in a very short period of time and continues to grow. Exchange Traded Funds is the only place where you can see what the future holds for both foreign and domestic ETFs.
Put this unique new tool to work for you, with a single source of ETF data and information. With well over 100 products covering most major and minor market segments in the United States and across the globe, ETFs can be used to construct a portfolio suited to virtually anyone's financial plan. Exchange Traded Funds gives you the knowledge needed to excel in this exciting new investment field and provides a fascinating look into the modern world of money.
Diane Garnick, Global Investment Strategist, State Street Global Advisors
The exciting class of funds for the new millennium
"By now, most sophisticated investors have recognized the value of exchange traded funds as flexible and cost-effective tools for accessing global markets. Wiandt and McClatchy's book provides essential background on the rapid proliferation of ETFs worldwide, specific product information, and a range of useful investment applications for different types of investors, all in a highly readable framework."
-Steven A. Schoenfeld, Managing Director, Head of International Equity Management, Barclays Global Investors
"Exchange traded funds are the most exciting new investment vehicle that Wall Street has wheeled out in many years. In this clear, comprehensive new book, Jim Wiandt and Will McClatchy not only deliver the 'insider's guide' that their subtitle promises, but also help investors get their bearings in using these new instruments effectively."
-John Prestbo, Editor, Dow Jones Indexes
"Comprehensive, authoritative, and beautifully written. A must for both individual investors and professionals interested in this rapidly evolving area: Don't buy shares without it."
-William Bernstein, Efficient Frontier Advisors
"Exchange Traded Funds, like the Indexfunds.com Web site that its authors help run, is must reading for every investor who uses ETFs."
-Gary Gastineau, Nuveen Investments
"Exchange traded funds meet the two primary objectives for successful investing: they add value and they're cheap. From one cover to the other, this book provides insight into the ETF market that can benefit all investors."
-Diane Garnick, Global Investment Strategist, State Street Global Advisors
Exchange traded funds, one of the most exciting new classes of funds, provide investors with an opportunity to get the benefits of individual stocks at the lower costs associated with mutual funds. Although they are a very new type of fund (they were first introduced in 1993), ETFs have nearly 100 billion in assets under management. Written by senior editors Jim Wiandt and Will McClatchy at IndexFunds.com, Exchange Traded Funds clearly explains this exciting class of funds for savvy individual investors and investment professionals alike. The authors provide a frank appraisal of the advantages of exchange traded funds including low management fees and lower capital gains taxes. They acquaint readers with the full range of what's available, and provide valuable information on evaluating the funds' usefulness and performance. They also describe proven strategies for using exchange traded funds to balance investment portfolios and manage long-term and short-term risk. IndexFunds.com is a Web site devoted to index funds. It currently hosts more than 100,000 visitors each month.
About the Author
Indexfunds.com is a Web site devoted to index funds. The site currently has nearly one million site page views each month with a growth rate of 10 percent monthly. The site has an e-mail newsletter, which circulates to some 7,000 people.
JIM WIANDT is the publisher of Indexfunds.com.
WILL McCLATCHY is a cofounder of Indexfunds.com.
Table of Contents
Chapter One: The Best of Both Worlds.
Chapter Two: Comparing EFTs to Traditional Mutual Funds.
Annual Management Fees and Expenses.
Visible Transaction Fees Paid by the Investor.
Hidden Transaction Fees Paid by the Investor.
Visible Fund Transaction Costs.
Hidden Fund Costs.
Phantom NAV Discounts.
ETFs vs. Index Futures and Closed-End Funds.
Chapter Three: ETFs for the Buy-and-Hold Investor.
Beyond the Numbers.
Diversifying with International and Small Company ETFs.
Avoiding Duplication and Betting on Sectors.
Advanced Features for the Average Investor.
Chapter Four: Institutional Investors Favor ETFs.
Equitization Ensures Liquidity.
Two Allocations for ETFs.
Managing Style Drift.
Why Institutions Use ETFs.
Trading Methods Vary.
Institutional Involvement in the ETF Creation and Redemption Process.
ETFs Present an Ever-changing Landscape.
Strategic Use of ETFs By Financial Advisors.
ETFs Serve a Purpose.
Chapter Five: Internal Workings of ETFs.
Birth of an ETF.
Someone is Minding the Store.
Mutual Fund Operations.
ETFs Turn the World Upside Down>.
Three Types of ETFs.
Chapter Six: The History of ETFs.
Outlook for the Future.
Chapter Seven: International ETFs.
Why Use International ETFs? A Brief History of International ETFs.
Why New ETFs Are Born.
Your Results May Vary.
Benefits and Risks of the Arbitrage Factor.
Watch All the Costs.
The Question of Currency.
How to Evaluate International ETFs.
What's Next for International ETFs?
Chapter Eight: Day Trading With ETFs.
A Short History of Day Trading.
Role of ETFs in Day Trading.
Tools of the Trade.
The Art of Execution.
Institutional Hedge Funds-A Brief Review.
Chapter Nine: Advanced Topics.
How ETFs Manage a Tax-Efficiency Edge over Traditional Mutual Funds.
Premiums and Discounts.
Examining ETF Liquidity.
Premiums and Discounts For International and Lightly-Traded ETFs.
Regulatory and Tax Complications.
Optimization and Tracking Issues.
Market Makers-What IS an AP?
How Specialists and Market Makers Price and Trade ETFs.
Appendix A: ETF Assets 1993-2000.
Appendix B: ETF Share Volume 1993-2000.
Appendix C: ETFs Trading on U.S. Markets.
Broad-Based Domestic ETFs (Including Size and Style-Based ETFs).
Sector-Based Domestic ETFs.
International ETFs Trading on U.S. Markets.
Appendix D: ETFs Trading on International Markets.