Cover image for Exchange traded funds
Exchange traded funds
Wiandt, Jim.
Personal Author:
Publication Information:
New York ; Chichester : Wiley, [2002]

Physical Description:
284 pages ; 23 cm
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HG6043 .W53 2002 Adult Non-Fiction Non-Fiction Area

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Exchange traded funds, one of the most exciting new classes of funds, provide investors with an opportunity to get the benefits of individual stocks at the lower costs associated with mutual funds. Although they are a very new type of fund (they were first introduced in 1993), ETFs have nearly 100 billion in assets under management. Written by senior editors Jim Wiandt and Will McClatchy at, Exchange Traded Funds clearly explains this exciting class of funds for savvy individual investors and investment professionals alike. The authors provide a frank appraisal of the advantages of exchange traded funds including low management fees and lower capital gains taxes. They acquaint readers with the full range of what′s available, and provide valuable information on evaluating the funds′ usefulness and performance. They also describe proven strategies for using exchange traded funds to balance investment portfolios and manage long-term and short-term risk. is a Web site devoted to index funds. It currently hosts more than 100,000 visitors each month.

Author Notes is a Web site devoted to index funds. The site currently has nearly one million site page views each month with a growth rate of 10 percent monthly. The site has an e-mail newsletter, which circulates to some 7,000 people.
JIM WIANDT is the publisher of
WILL McCLATCHY is a cofounder of

Table of Contents

Forewordp. IX
Prefacep. XV
Acknowledgmentsp. XIX
Chapter 1 The Best of Both Worldsp. 1
Chapter 2 Comparing EFTs to Traditional Mutual Fundsp. 7
Annual Management Fees and Expensesp. 10
Visible Transaction Fees Paid by the Investorp. 13
Hidden Transaction Fees Paid by the Investorp. 14
Visible Fund Transaction Costsp. 16
Hidden Fund Costsp. 16
Dividend Dragp. 18
Phantom NAV Discountsp. 18
Continuous Pricingp. 19
Tax Consequencesp. 21
ETFs vs. Index Futures and Closed-End Fundsp. 23
Conclusionp. 24
Chapter 3 ETFs for the Buy-and-Hold Investorp. 25
Beyond the Numbersp. 26
Diversifying with International and Small Company ETFsp. 29
Avoiding Duplication and Betting on Sectorsp. 31
Advanced Features for the Average Investorp. 34
Chapter 4 Institutional Investors Favor ETFsp. 39
Equitization Ensures Liquidityp. 40
Two Allocations for ETFsp. 42
Managing Style Driftp. 42
Why Institutions Use ETFsp. 43
Trading Methods Varyp. 44
Institutional Involvement in the ETF Creation and Redemption Processp. 46
ETFs Present an Ever-changing Landscapep. 48
Strategic Use of ETFs By Financial Advisorsp. 49
ETFs Serve a Purposep. 55
Chapter 5 Internal Workings of ETFsp. 56
Birth of an ETFp. 57
Someone is Minding the Storep. 58
Mutual Fund Operationsp. 59
ETFs Turn the World Upside Downp. 60
Three Types of ETFsp. 63
Chpater 6 The History of ETFsp. 68
Outlook for the Futurep. 74
Chapter 7 International ETFsp. 78
Why Use International ETFs?p. 80
A Brief History of International ETFsp. 81
Why New ETFs Are Bornp. 84
Your Results May Varyp. 85
Benefits and Risks of the Arbitrage Factorp. 87
Watch All the Costsp. 89
The Question of Currencyp. 90
How to Evaluate International ETFsp. 91
What's Next for International ETFs?p. 92
Chapter 8 Day Trading With ETFsp. 98
A Short History of Day Tradingp. 99
Retail Tradersp. 100
Role of ETFs in Day Tradingp. 102
Tools of the Tradep. 103
The Art of Executionp. 105
Institutional Hedge Funds--A Brief Reviewp. 108
Chapter 9 Advanced Topicsp. 111
How ETFs Manage a Tax-Efficiency Edge over Traditional Mutual Fundsp. 111
Premiums and Discountsp. 114
Examining ETF Liquidityp. 116
Premiums and Discounts For International and Lightly-Traded ETFsp. 118
Trading Costsp. 119
Regulatory and Tax Complicationsp. 122
Optimization and Tracking Issuesp. 129
Market Makers--What IS an AP?p. 129
How Specialists and Market Makers Price and Trade ETFsp. 130
Appendix A ETF Assets 1993-2000p. 137
Appendix B ETF Share Volume 1993-2000p. 143
Appendix C ETFs Trading on U.S. Marketsp. 149
Broad-Based Domestic ETFs (Including Size and Style-Based ETFs)p. 150
Sector-Based Domestic ETFsp. 181
International ETFs Trading on U.S. Marketsp. 212
HOLDRsp. 238
Appendix D ETFs Trading on International Marketsp. 257
Indexp. 277