Table of Contents
Preface ix
Acknowledgments xi
Part I ETFs: A New Way to Invest and Trade
Chapter 1 Taking an Active Approach with ETFs 3
Understanding ETFs 5
Basic Tenets of ETF Investing 8
Active Investing Approach 11
Three Must-Know Types of ETFs 12
The ETF Investor 16
Portfolio Approach 17
Conclusion: The Discerning, Active Investor 18
Chapter 2 Judging ETFs 21
Launching a Fund 22
A Book Is More than the Proverbial Cover 26
Beware of Zombies 29
Nontraditional ETFs 31
Keep Your Eyes Open 35
Chapter 3 Understanding Indexing: New Options for Investors 37
Traditional ETFs 38
Targeting Sectors with Cap-Weighted Indexes 40
Beating the Market with Customized Index ETFs 42
Dynamic ETFs 45
Life-Cycle and Hedge Fund ETFs 47
Currency Carry Trade ETFs 49
Active ETFs 50
Looking Ahead 53
Part II Asset Allocation Strategies
Chapter 4 Building a Portfolio Using ETFs 57
The Super Hands-On Active Trader 58
The High-Touch Satellite Investor 59
The Portfolio Builder 61
Investment Continuum 65
The Importance of Diversification: Nothing to Excess 66
Intelligent Diversification with ETFs 70
Chapter 5 Trading: Navigating the Storm 73
Placing Your Trades 77
Be Aware of the International Disconnect 78
All about Liquidity 79
When Newer Isn't Necessarily Better 86
Big Picture and Short-Term View 89
Chapter 6 International Investing 91
Gaining Exposure through Regional Funds 92
Single-Country Promise and Pitfalls 94
Commodity Plays 99
ADRs versus Ordinaries 102
Shifting Targets 103
New Offerings Ahead 105
Chapter 7 Gaining Exposure to Commodities 107
Physical Commodity ETFs-Panning for Profits 108
Equity-Based Commodity Exposure 111
Beware the Futures-Backed Commodity Fund 114
Using ETNs to Gain Access to Commodities 117
Commodity Exposure: A Cautionary Tale 121
Chapter 8 Staying Current with TIPS and Currencies 125
Dealing with Inflation 126
Currencies 129
Summing It Up 134
Part III Tying It All Together
Chapter 9 Looking Ahead: A Changed Landscape 139
Victims of Their Own Success 144
Searching for Opportunity 148
It's Time for a Change 150
Back to the Future 151
Appendix A ETF Ranking System 155
Appendix B Tax Guide for ETF Investors 189
Appendix C Growth of the ETF Industry from 2000 to 2009 201
Appendix D Sample Model Portfolios 203
About the Authors 207
Index 209