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

Richard A. Ferri (Author)

Book Description

Publication Date: August 24, 2009

Exchange-traded funds (ETFs) are revolutionizing the investment industry. From their introduction in 1993, ETFs have expanded exponentially over the past fifteen years. You, as an informed investor, need to know what makes ETFs unique, how they work, and which funds may help you achieve your financial goals. The updated edition provides the most current look at the ETF market, where the number of funds has doubled since the book first published in December 2007. A huge number of bonds funds, commodities funds, currency funds, leverage and short funds have been introduced. In addition, actively managed ETFs are here now, and some major mutual fund companies, like Fidelity and PIMCO, are getting into the market. Remarkably, the terminology in the ETP marketplace is also evolving at a rapid pace. The acronym ETP for exchange-traded product has become an industry standard. The term did not exist two years ago.

Written by veteran financial professional and experienced author Richard Ferri, The ETF Book, Updated Edition 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 contains the most up-to-date information on navigating the growing number of ETFs available in today's marketplace. Divided into four comprehensive parts, this guide addresses everything from ETF basics and in-depth fund analysis to the tax benefits of using ETFs. Included are a variety of portfolio management strategies using ETFs and examples of different model portfolios that you can easily adapt to your own investment endeavors.

Whether you're just getting started or are a seasoned ETF investor, The ETF Book, Updated Edition will help enhance your understanding of this evolving field by:

• Examining the fundamental differences between exchange-traded portfolios
• Highlighting how to effectively implement a wide selection of ETFs?from
• Exploring specific ETF strategies?from buy and hold to market timing and sector rotation
• Introducing Index Strategy Boxes?a new way to understand index construction and how a fund is investing your money
• And much more

Each chapter of The ETF Book, Updated Edition offers concise coverage of various issues. It is filled with in-depth insights on different types of ETFs and practical advice on how to select and manage them. The appendixes are an added benefit, offering an ETF Resource List, which will point you to more places for information on these structures, and a detailed Glossary to help you with industry-specific definitions.

The ETF Book, Updated Edition is an invaluable road map for developing a winning investment strategy. Armed with the knowledge found throughout these pages, you'll be prepared to build a solid portfolio of ETFs that will benefit you for years to come.

Editorial Reviews

Review

"Investors interested in ETFs will find this book an extremely useful resource. Virtually every topic related to ETFs is covered, in an unbiased, comprehensive, and easy-to-understand manner." (Advisor Perspectives, December 2007)

"The ETF Book is an excellent compendium of the background, structural drivers, pros and cons of ETFs, as well as the strategies that can be advanced using them. Years from now, this book will be noted for introducing index strategy boxes as a powerful analytic." (SFO Magazine, April 2008) --This text refers to an out of print or unavailable edition of this title.

From the Inside Flap

When the original edition of The ETF Book was first published in 2007, it immediately became the source for cutting-edge information on many exchange-traded products (ETPs)—mainly exchange-trade funds (ETFs). The book has still not been surpassed, but with the marketplace for ETPs quickly evolving, now is the perfect time for the Updated Edition of The ETF Book.

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.

Becoming an informed investor means that you need to know what makes ETFs unique, how they work, and which funds may help you achieve your financial goals. Whether you're just getting started or are a seasoned investor, the Updated Edition of The ETF Book will help enhance your understanding of this dynamic field by:

• Detailing the different types of ETPs, including ETFs, exchange-traded notes (ETNs), grantor trusts, and unit investment trusts (UITs)

• Exploring the latest ETF strategies—from buy, hold, and rebalance to market timing and sector rotation

• Highlighting how to implement a wide selection of ETPs—from equity and fixed income to commodities and leveraged funds

• Examining the fundamental differences between index-based ETPs

• Introducing Index Strategy Boxes—a proven way to understand index construction that is the basis for how most ETPs are invested

• And much more

As an added benefit, this book's appendixes offers an ETF Resource List—which will point you to other sources that discuss these structures—and a detailed Glossary to help you with industry-specific definitions.

The Updated Edition of The ETF Book has everything you need to develop a winning investment strategy. Each chapter is filled with new insights on different types of ETFs and practical advice on how to select and manage them. Reflecting the most recent changes in this field, the Updated Edition of The ETF Book will prepare you to build a solid portfolio of ETFs that will benefit you for years to come.

See all Editorial Reviews

Product Details

• Hardcover: 375 pages
• Publisher: Wiley; Updated Edition edition (August 24, 2009)
• Language: English
• ISBN-10: 0470537469
• ISBN-13: 978-0470537466
• Product Dimensions: 9.2 x 6.3 x 1.3 inches
• Shipping Weight: 1.4 pounds (View shipping rates and policies)
• Average Customer Review: 4.3 out of 5 stars  See all reviews (23 customer reviews)
• Amazon Best Sellers Rank: #172,763 in Books (See Top 100 in Books)

More About the Author

Richard Ferri is the founder of Portfolio Solutions, LLC (www.portfoliosolutions.com), a low-fee investment advisory firm based Troy, MI. Portfolio Solutions manages close to $1 billion in separately managed accounts for high-net-worth individuals, families, non-profit organizations, and corporate pension plans. The firm specializes in analyzing and using low-cost and tax-efficient index funds and ETFs to build wealth for clients.

Mr. Ferri earned a Bachelor of Science degree in Business Administration from the University of Rhode Island and a Master of Science degree in Finance from Walsh College. He also holds the designation of Chartered Financial Analyst (CFA). Prior to joining the investment community in 1988, Rick served as an officer and jet pilot in the U.S. Marine Corps and is now retired from the Marine Corps Reserve.

Customer Reviews

Most Helpful Customer Reviews

35 of 38 people found the following review helpful:

5.0 out of 5 stars The ETF Book, December 30, 2007

By 

Robert W. Uphaus - See all my reviews
(REAL NAME)   

This review is from: The ETF Book: All You Need to Know About Exchange-Traded Funds (Hardcover)

Let me say at the outset that I am NOT a professional investor, that I HAVE invested in individual securities as well as mutual funds for forty years, that I now, as a retiree, restrict myself to annuity income and mutual fund investments (mostly passive), and that I have not yet purchased ETFs, though Ferri's book convinces me ETFs could perform a useful function in my portfolio.

If, like me, you have not yet invested in ETFs but want to know how they are constructed, how they function, and what role they might serve in your portfolio, then Rick Ferri's book is the FIRST place you should go for a comprehensive guide to understanding ETFs.

Ferri's book can be read in, or through depending on the reader's interests. By this I mean his book divides into four free-standing, but continuous, parts. The first part deals with ETF Basics--the history, mechanics, and potential benefits and drawbacks. Part Two, a real eye-opener for this reader, focuses on index construction and provides an index strategy box akin to how Morningstar analyses mutual funds. Part Three broadens the discussion to styles and choices--from broad domestic/global indexes to equivalents of slice and dice strategies. Part Four shows, in detail, how investors can incorporate ETFs into their asset allocation plan--whether they are inclined to passive, active, or a combination of portfolio strategies.

Thankfully, Rick Ferri goes to great pains to communicate clearly with his readers. To my mind, he has no axe to grind, although as a professional portfolio manager he advocates passive investing. Ferri provides many alternative portfolios (passive, active, combo) spread along a continuum of life-cycle investing.

It certainly speaks well of this fine book that it receives the ringing endorsements of the likes of Don Phillips, David Blitzer, and Anthony Rochte, Senior Managing Director of State Street Global Advisors. Robert Uphaus

15 of 15 people found the following review helpful:

4.0 out of 5 stars This is my 2nd book written by Rick Ferri, January 8, 2008

By 

R. VUNDAVALLI "vrmk" (Arkansas) - See all my reviews
(REAL NAME)   

Amazon Verified Purchase

This review is from: The ETF Book: All You Need to Know About Exchange-Traded Funds (Hardcover)

Rick Ferri has done it again. I got this book as I was looking actively for a good "introductory" book on ETFs. I already read Rick's "All About Asset Allocation" and like it very much. So I did not hesitate to preorder this book.

This book does a great job in INTRODUCING indexing and ETF's. It covers a lot of ground about various types of ETFs their pros and cons. There are lot of finer points spread throughout the book which are interesting for people starting new and are hard to come across on web for an average web user like me - eg: pros and cons of Vanguard ETF (VIPER) structure where its ETFs are another class of shares of its index mutual funds. I would have rated this 5 stars except for some repetition of text multiple times in multiple chapters about types of indexing etc in Parts II and Part III of the book. Model portfolios section could have been dealt better.

16 of 18 people found the following review helpful:

3.0 out of 5 stars Great content; poor editing, May 4, 2009

By 

Walt Steinbeck "Cabildero" (El Capital) - See all my reviews

Amazon Verified Purchase

This review is from: The ETF Book: All You Need to Know About Exchange-Traded Funds (Hardcover)

I found this book helpful to better understand some of the nuances about ETFs that are quite complex, but I couldn't help noticing the many spelling and grammatical errors that were present throughout the text. It seemed like this book was quickly thrown together so that it could be one of the first comprehensive and detailed looks at a new investment phenomenon that is gaining ground on mutual funds and closed-end funds.

The only problem is that some of the errors in this book go beyond simple spelling mistakes, and may even lead to some serious investment mistakes and negative tax implications if readers aren't otherwise familiar with account types that the author misrepresents in this book. For example, Traditional IRAs are not non-taxable, rather they are tax deferred. Be careful, because if you read this book and invest in an IRA because you think it is non-taxable, you will be in for quite a ruid awakening. These kinds of mistakes undermine an otheriwse helpful and useful text about ETFs.

My other problem with this book is the clear bias the author expreses in favor of passive investment strategies. Without the bias, the book would have felt more academic and objective, and not so skewed.

The book is worth reading, but be careful, because there are some serious flaws that can lead to trouble here.