Customer Reviews

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

5 star:		(11)
4 star:		(9)
3 star:		(1)
2 star:		(2)
1 star:		(0)

 

 

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

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.

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.

I love ETF investing. This book is a must-read if you're interested in investing in ETFs. You'll no doubt want to read other books too. But this is the cornerstone of the library of the ETF investor.

The book is well written and arranged nicely. It's a good read and a great reference.

It gives you some sample life cycle investing portfolios, which I find most useful.

You'll find the benefits and the drawbacks of ETF investing. You'll learn about the different types of ETFs.

You'll also learn about the different management styles available.

I would have liked more information on fixed income investing. I find there's not much available on that. I also find there isn't anything about defensive investing, which we need right now.

There is help with asset allocation but I suspect you'll want to buy a book that devotes itself entirely to that subject.

I keep the book near my left hand as I readjust my portfolio and when I'm considering a fund.

I highly recommend this great book.

I am a big fan of Rick Ferri's books, and his postings on the Diehards dot Org website (Amazon does not allow links or web site addresses in these reviews).

I am also a big fan of Larry Swedroe's books, and his postings on the Diehards dot Org website.

I used this book.....plus Larry's books to contrast and compare Rick's asset class recommendations to Larry Swedroe's recommendations.

Both Rick and Larry agree on which asset classes investors should use in their portfolios with a few exceptions.

Rick is ok with using Vanguard's Total Bond fund (VBMFX). Larry does not like Vanguard's Total Bond fund (VBMFX) because it contains 33% Mortgage Backed Securities (MBS). Larry would recommend other Vanguard short term bond funds which do not include any MBS like the Short Term Bond Index fund (VBISX) and the Intermediate Term Bond Index fund (VBIIX).

I already knew Larry was an advocate of including commodities in the form of PCRIX in your portfolio. Rick Ferri contends that commodities should not be included in your portfolio because they lower your portfolio return. Rick contends commodity funds have 0% return, have high expense ratios, and poor tax efficiency.

Larry also disagrees with two other Ferri recommendations, high yield (junk) bonds like Vanguard's High Yield fund (VWEHX) and emerging market bonds like Payden's PYEMX. Larry contends the rewards of junk bonds are not worth the risk and emerging market bonds behave too much like stocks.

My hat is off to Rick for the tremendous number of hours it must have taken to compile the exhaustive data on ETF's for the book. Rick is one of the few people brave enough to make long term forecasts for asset class returns as well.

If you are looking for the Bible of ETF investing, this book is it.



In this age of full disclosure, it can be noted that I am the author and publisher of the book INDEX MUTUAL FUNDS: HOW TO SIMPLIFY YOUR LIFE AND BEAT THE PROS. This book is an introduction to the concept of index funds is and is sold on Amazon. I am also a contributing author to the book THE BOGLEHEADS GUIDE TO RETIREMENT PLANNING available from Amazon with an estimated release date of October 2009. I have also written 21 short stories on investing which are also available on Amazon.

If you want practical ideas on long term passive investing, read some of the books below:

The Richest Man in Babylon
Bogle on Mutual Funds: New Perspectives for the Intelligent Investor
The Millionaire Next Door
The Four Pillars of Investing: Lessons for Building a Winning Portfolio
A Random Walk Down Wall Street: The Time-Tested Strategy for Successful Investing, Ninth Edition
The Coffeehouse Investor: How to Build Wealth, Ignore Wall Street, and Get On With Your Life
The Bogleheads' Guide to Investing

The book is a good starters guide to ETFs. You should get the book if you know next-to-nothing about ETFs. However, if you feel that you know quite a bit, then this book may not be for you, as it is of breadth above depth.

It covers sufficient ground, and one thing that stood out is the author's commitment to writing from the small investor's point-of-view, and how to protect our best interests. He guides and reminds us about what our best interests are, and there are very relevant references to mutual funds and general investment considerations.

The text is a tad too repetitive, but I guess that it's a slight weakness in writing style and shouldn't count against the overall qualities of the book. Importantly, he presents technical information in extremely easy-to-understand methods, such that everything is layman-style and smooth-going.

However, if you are non-American (I'm Singaporean), it may lose a little value to you. There is little on the merits and demerits of international funds. As emerging market ETFs may be lucrative, it's a small pity.

To be fair, the book's purpose is more informative and hand-holding than one telling you the ETFs to purchase, so it's real and sincere in a way.

Provides a wealth of text book knowledge. It feels like you are studying for a college level course, replete with history and lists.

I find it somewhat lacking in helping me with picking etf's and making trades.

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

I have been a long-term fan of low-cost, passive investing (i.e. index funds) and have read all of Mr. Ferri's books. Recently, I have begun using ETFs in place of index funds.

Mr. Ferri's book is a well-researched, complete guide to ETFs. I believe it will be viewed as the definitive ETF book because of its wide-ranging coverage of everything from how ETFs can be used in a portfolio to details of ETF construction.

The practical tips (e.g. don't trade an ETF at the beginning or end of a trading day) alone are worth the price of the book. Also, I really like the detailed information on how various ETFs (e.g. gold ETFs) are constructed.

Great resource for individual investors as well as for professionals!

This is a great book for content: very thorough introduction to ETFs; compares ETFs to mutual funds and describes other exchange traded securities that may be confused with real ETFs. Recommended reading before getting into ETF investing. (Recommended supplementary work: the ETF section of morningstar.com. Note: I have no connection to Morningstar, just a long time user).

About the Kindle edition: the Kindle formating is pretty bad. The line spacing compared to the type size is very close and tight, which makes for tiresome reading. Some books' formats simply don't seem to convert well for Kindle, and this is one of them.

On the plus side for Kindle: all the tables and charts are readable; although you may need to look closely, the text is readable, which is more than I can say for some Kindle editions of books with charts & graphs.

Excellent book to have on hand for reference. Rick provides a framework for comparing ETFs, and clearly describes the buy/sell process for mutual fund investors who don't actively trade stocks. This is a book you will use over and over, not just once. It won't give you this month's "hot" ETF. It will help you construct a portfolio made entirely of ETFs, or help you use ETFs to fill in asset classes missing from your open-ended funds.