ETF Strategies and Tactics Hedge Your Portfolio in a Changing Market

by Rosenberg, Laurence; Weintraub, Neal; Hyman, Andrew

• ISBN13: 9780071497343
• ISBN10: 007149734X
• Edition: 1st
• Format: Hardcover
• Copyright: 2008-04-14
• Publisher: McGraw-Hill Education

Summary

In just a decade, the exchange-traded funds (ETFs) market has grown from one billion dollars to more than half-a-trillion dollars.While previous books have provided introductions to and listings of ETFs,ETF Strategies and Tacticsoffers practical guidance on how to invest in these funds and use them to balance your portfolio.Written by a powerhouse authorial team,ETF Strategies and Tacticsthoroughly covers the ins and outs of ETFs, detailing how they work, their distinctive characteristics, who trades them, who owns them, and their advantages and disadvantages compared with other investment vehicles. As markets evolve, new ETFs come and go. This authoritative reference will keep you on top of your game by providing focused decision-making techniques that help determine the viability of any ETF, including its value in sector and international investing.While laying out a proven, systematic ETF investment plan,ETF Strategies and Tacticscovers such valuable topics as: ETFs vs. mutual funds How ETFs are developed, what types of indexes are used, and the costs that determine returns How ETF regulations can help investors spot red flags in a fund and avoid tax problems The underlying tools of every ETF that can contribute to effective trading and minimized costs and taxes The proper use of ETFs based on an investor's goals and his/her ability to manage risk The unique short-selling opportunities associated with ETFs ETF options How to trade ETFs in the European market Inverse ETFs that go up when the market goes downComplete with one-on-one interviews with professionals from major ETFs, as well as a number of valuable appendixes,ETF Strategies and Tacticsis a unique guide you will keep at your fingertips during your day-to-day activities.

Author Biography

Laurence M. Rosenberg is the former chairman of the Chicago Mercantile Exchange.

Neal Weintraub is director of education and strategy for World Wide Associates, Ltd., and author of Tricks of the Active Trader (0-07-146863-3).

Andrew S. Hyman is marketing director at Fiske Walter Capital Management.

Table of Contents

Acknowledgments	p. xiii
Introduction	p. xix
What Are ETFs, and What Makes Them Good
Investments?	p. 1
What Is an ETF?	p. 2
Origins of ETFs	p. 2
Growth of the ETF Market	p. 5
Product Varieties	p. 6
Why Investors Are Embracing ETFs	p. 7
ETFs Compared to Mutual Funds	p. 11
The Investment Universe	p. 12
Investment Companies	p. 14
Expenses	p. 26
Tax Efficiency	p. 36
Similarities and Differences between Mutual Funds and ETFs	p. 42
How ETFs Work	p. 47
Buying and Selling ETFs: An Illustration	p. 47
ETF Mechanism	p. 49
Arbitrage and ETFs	p. 51
Differences between Unit Investment Trusts and Open-End Companies	p. 52
Grantor Trusts/HOLDRs	p. 54
Actively Managed ETFs in the Future	p. 57
ETF Regulation	p. 61
ETFs and ETF Look-Alikes	p. 62
Illustration of an ETF Look-Alike	p. 64
Personnel Issues	p. 66
Taxes	p. 69
Regulations outside the United States	p. 72
ETF Indexes	p. 77
What Are Indexes?	p. 77
Development of an Index	p. 79
Index Diversity	p. 82
Major Indexes Measured by ETFs	p. 83
Tax Issues	p. 85
The ETF Universe	p. 89
ETF Investment Options	p. 89
Classification by Capitalization	p. 99
Broad Market Index	p. 100
Funds Classified by Market Capitalization of Investments	p. 101
Style	p. 104
International Funds	p. 109
Sector	p. 114
Specialty Funds	p. 122
Commodity	p. 125
Currency	p. 125
Fixed Income	p. 126
Support and Resistance with Pivots	p. 129
Pivot Points and ETFs	p. 130
Moving Averages and ETFs	p. 133
What about Swing Trading?	p. 135
ETF Money Management	p. 145
Margin-to-Equity Parameter	p. 145
Short Selling: Securities and ETFs	p. 153
Short Selling Securities	p. 154
Short Selling ETFs	p. 154
Hedging Your Portfolio	p. 156
ETF Arbitrage and Spreading	p. 159
Forms of Arbitrage	p. 160
ETF Arbitrage	p. 161
Advantages of Spreading	p. 162
Identifying Arbitrage Opportunities	p. 163
Options for ETFs	p. 165
Four Basic Strategies	p. 166
Option Terminology	p. 167
Option Strategies	p. 169
Evaluating ETFs	p. 173
Price/Earnings Ratio	p. 173
Price/Sales Ratio	p. 174
Financial Ratios	p. 175
Analyze the Company's Profitability	p. 176
Getting the Research Done	p. 180
ETFs and Market Activity	p. 183
Read the Trends ... and That Includes ETFs	p. 184
Trade in Terms of Probability	p. 187
Design, Maintain, and Manipulate Your ETF Portfolio	p. 191
Develop Your "Watch List" of ETFs	p. 191
Export Your Portfolio into Excel	p. 194
Maintain and Manipulate Your Portfolio	p. 197
Two Significant Trading Strategies	p. 199
European ETFs	p. 203
Invest in European ETFs	p. 204
ETF Choices	p. 205
ETF Managers-Europe and the United States	p. 205
Taxes	p. 209
Regulation	p. 210
Strategies	p. 211
European Currency ETFs	p. 211
Europe Is Not One Country	p. 212
Eurozone Issues	p. 212
ETF Practical Applications	p. 223
Navigating Web Pages	p. 224
Examine Typical ETF Screens	p. 225
Herd Mentality	p. 232
ETF Spreads	p. 233
One-on-One Interviews: Leading ETF Providers	p. 241
American Stock Exchange: The Birthplace of Exchange-Traded Funds	p. 242
Dow Jones	p. 246
iShares Germany	p. 250
Keefe, Bruyette, and Woods (KBW)	p. 256
MSCI BARRA	p. 260
Van Eck Global	p. 265
WisdomTree	p. 268
XShares and HealthShares	p. 275
U.S. ETFs and Trading Volume as of October 1, 2007	p. 287
SPDR Strategies	p. 313
Building a Customized and Diversified Equity Portfolio That Matches Your Specific Objective	p. 313
Manage Risk through Asset Allocation by Sector	p. 315
Rebalance Portfolio Based on Current Sector Weightings	p. 317
Gain Diversified Access to Attractive Investment Themes	p. 318
Enhance After-Tax Returns with Tax Swaps	p. 319
Use ETF Flexibility to Hedge Concentrated Positions	p. 320
Web Sites	p. 323
www.finance.yahoo.com	p. 323
www.etfguide.com	p. 325
www.etfconnect.com	p. 326
www.indexuniverse.com	p. 327
www.finra.org	p. 328
www.amex.com/etf/EtMain.jsp	p. 330
www.fidelity.com	p. 331
www.geckosoftware.com	p. 333
www.investors.com/etf	p. 333
www.lrosenberg.com	p. 334
www.seekingalpha.com	p. 335
www.cheatthestreet.com	p. 336
www.vanguard.com	p. 336
www.optionsxpress.com	p. 337
Endnotes	p. 339
Bibliography	p. 347
Index	p. 351
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