The ETF Book: All You Need to Know About Exchange-Traded Funds

Written by veteran financial professional and experienced author Richard Ferri, The ETF Book gives you a broad and deep understanding of this important investment vehicle and provides you with the tools needed to successfully integrate exchange-traded funds into any portfolio.

This detailed, yet clearly articulated guide written by veteran financial professional and experienced author Richard Ferri contains the most up-to-date information on navigating the growing number of ETPs available in today’s market. Divided into four comprehensive parts, this revised resource introduces you to everything from successful structures such as bond funds, commodities funds, and currency funds to concepts such as actively managed ETFs that have recently become a reality. Along the way, you’ll gain valuable insight into how you can effectively integrate ETFs into any portfolio.

Author’s Note:

There’s no topic in personal finance today that’s hotter than exchange-traded funds (ETFs). Die-hard believers in passive investing love the low costs and broad diversification available through ETFs. Traders and market timers love the ability to buy and sell on an intraday basis, and they cherish the growing number of highly specialized offerings that allow them to execute far more sophisticated strategies than ever before. Even active managers are getting in on the scene, using ETFs to ‘‘equitize’’ their cash positions and imagining a future where actively managed ETFs will be widely available. Never before have so many investors embraced a financial concept so rapidly and for such a wide variety of reasons as they have with exchange-traded funds.

The ETF phenomenon is perhaps most revolutionary from the individual investor’s perspective. For years, there was a gulf between what was possible for institutional investors and what the little guy could do. Like many small investors, I recall reading about the global wanderings of legendary investor Jim Rogers, author of Investment Biker and other significant investment books. Rogers would observe global events and turn them into investment ideas, often shorting certain currencies, going long various commodities, and making bets on specific subsectors of a market, such as Japanese small companies.

I was dazzled by his insight, but was frustrated by my own inability toactuponsuchinsightsevenifIcouldbeascleverasRogersin identifying them. Sure, I could buy shares in an international equity fund or a precious metals fund, but I couldn’t be sure that the fund’s manager was making the bets that I wanted. And even if I did identify a manager who seemed to have his portfolio aligned the way I wanted it to be, there was no guarantee that positioning would stay in place. Simply put, there was no way that I could do what Rogers did, even if I had the right ideas.

Exchange-traded funds have changed all that. Today the toolkit available to individual investors is bigger and better than ever before. Highly specialized precision investment instruments are now part of the small investors’ arsenal. If you want to bet on the fortunes of pharmaceutical stocks or regional banks, there’s an ETF for you. If you want to play the real estate market, there are multiple ETFs available for that purpose, investing in either domestic or international real estate.

If you want to bet on companies that might find a cure for cancer or invest only in companies that don’t do business in Somalia, there’s an ETF for you. If you want to bet on companies known for innovation, ones that are leaders in their field, or ones that are followed by only a small number of analysts, there’s an ETF for you. And all of these bets can go in either direction, as ETFs can be bought long or sold short. There’s little to no limit to what an investor may do today; almost any choice is possible.

Contents:

• ETFs from Evolution to Revolution
• The Nuts and Bolts of ETFs
• Types of Exchange-Traded Portfolios
• ETF Benefits and Drawbacks
• Actively Managed ETFs
• Market Indexes and Custom Indexes
• Index Strategy Boxes
• Index Security Selection
• Index Security Weighting
• Broad U.S. Equity and Style ETFs
• Global Equity ETFs
• Industry Sector ETFs
• Special Equity ETFs
• Fixed Income ETFs
• Commodity and Currency ETFs
• Portfolio Management Strategies
• Passive ETF Portfolios
• Life Cycle Investing
• Active Portfolio Management with ETFs
• Special Portfolio Strategies
• Operational Tips for ETF Investors

The ETF Book: All You Need to Know About Exchange-Traded Funds By Richard A. Ferri PDF