Exchange-Traded Funds For Dummies

Become an ETF expert with this up-to-date investment guide

Want to expand your portfolio beyond stocks and mutual funds? (Of course you do, you smart investor you.) Then take a look at exchange-traded funds (ETFs)! A cross between an index fund and a stock, they're transparent, easy to trade, and tax-efficient. They're also enticing because they consist of a bundle of assets (such as an index, sector, or commodity), so diversifying your portfolio is easy. You might have even seen them offered in your 401(k) or 529 college plan.

Exchange-Traded Funds For Dummies is your primer on ETFs. It gives you an insider (the legal kind!) perspective on the investment process, starting with an overview of ETFs and how they differ from stocks and mutual funds. The book also helps you measure risk and add on to your portfolio, and offers advice on how to avoid the mistakes even professionals sometimes make. Throughout, you'll also find plenty of tips, tricks, and even sample portfolios to set you up on the right path for investment success.

With Exchange-Traded Funds For Dummies, you will:

• Find out exactly what exchange-traded funds are and why they make good investments

• Mix and match stock portfolios to diversify yours

• Go beyond stocks for maximum diversification: bonds, real estate, and commodity ETFs

• Maintain your portfolio for future growth

With the tricks of the trade in Exchange-Traded Funds For Dummies, you can easily apply the knowledge you gain to turn good investments into great ones. Happy earning!

Auteur

Russell Wild, MBA, is the author or coauthor of nearly two dozen books, including Index Investing For Dummies and Bond Investing For Dummies. He has a master's degree in business administration and a graduate certificate in personal financial planning. Wild is also an associate of NAPFA.

Texte du rabat

Putting the fun in funds

With ETFs, you can expand your investing horizons in a truly mind-boggling number of waysbut why let your mind boggle when you could learn about it the easy way? Exchange-Traded Funds For Dummies breaks down the ETF basics (what are they, anyway?) and then helps you map out all your portfolio possibilities. Bullish on tech stocks? Want to make sure your portfolio keeps up with inflation? Looking for an easy way to build a safe bond portfolio? It's all available within the ETF world, and Dummies shows you how to get started. Inside

• Differentiate between ETFs, mutual funds, and individual securities
• Research ETFs and find funds that fit in your portfolio
• Manage your risk, control costs, and diversify
• Explore specialized funds like commodities and REITs

Résumé
Become an ETF expert with this up-to-date investment guide Want to expand your portfolio beyond stocks and mutual funds? (Of course you do, you smart investor you.) Then take a look at exchange-traded funds (ETFs)! A cross between an index fund and a stock, they're transparent, easy to trade, and tax-efficient. They're also enticing because they consist of a bundle of assets (such as an index, sector, or commodity), so diversifying your portfolio is easy. You might have even seen them offered in your 401(k) or 529 college plan. Exchange-Traded Funds For Dummies is your primer on ETFs. It gives you an insider (the legal kind!) perspective on the investment process, starting with an overview of ETFs and how they differ from stocks and mutual funds. The book also helps you measure risk and add on to your portfolio, and offers advice on how to avoid the mistakes even professionals sometimes make. Throughout, you'll also find plenty of tips, tricks, and even sample portfolios to set you up on the right path for investment success. With Exchange-Traded Funds For Dummies, you will:

• Find out exactly what exchange-traded funds are and why they make good investments
• Mix and match stock portfolios to diversify yours
• Go beyond stocks for maximum diversification: bonds, real estate, and commodity ETFs
• Maintain your portfolio for future growth With the tricks of the trade in Exchange-Traded Funds For Dummies, you can easily apply the knowledge you gain to turn good investments into great ones. Happy earning!

Contenu
Introduction 1

Since the First Edition 1

Out of the shadows 2

Filling* the investment voids 2

Creations of dubious value 2

Morphing into new creatures 3

About This Book 3

Foolish Assumptions 5

Icons Used in This Book 5

Beyond the Book 6

Where to Go from Here 6

Part 1: The ABCs of ETFs 7

Chapter 1: No Longer the New Kid on the Block 9

In the Beginning 10

Enter the traders 10

Moving south of the border 10

Fulfilling a Dream 11

Goodbye, ridiculously high mutual fund fees 11

Hello, building blocks for a better portfolio 12

Will you miss the court papers? 12

Not Quite as Popular as the Beatles, But Getting There 12

Moving from Wall Street to Main Street 14

Keeping up with the Vanguards 15

Ready for Prime Time 16

The proof of the pudding 17

The major players 18

Twist and shout: Commercialization is tainting a good thing 19

Chapter 2: What the Heck Is an ETF, Anyway? 23

The Nature of the Beast 24

Choosing between the Classic and the New Indexes 25

Preferring ETFs over Individual Stocks 26

Distinguishing ETFs from Mutual Funds 27

Why the Big Boys Prefer ETFs 28

Trading in large lots 28

Savoring the versatility 28

Why Individual Investors Are Learning to Love ETFs 30

The cost advantage: How low can you go? 30

Uncle Sam's loss, your gain 33

What you see is what you get 36

Getting the Professional Edge 37

Consider a few impressive numbers 38

You can do what they do! 38

Passive versus Active Investing: Your Choice 39

The index advantage 39

The allure of active management 40

Why the race is getting harder to measure and what to do about it 41

Do ETFs Belong in Your Life? 42

Calculating commissions 42

Moving money in a flash 42

Understanding tracking error 43

Making a sometimes tricky choice 43

Chapter 3: Getting to Know the Players 47

Creating an Account for Your ETFs 48

Answering a zillion questions 48

Placing an order to buy 50

But wait just a moment! 51

Trading ETFs like a pro 51

Introducing the Shops 52

What to look for 52

Price is no longer key 53

The Vanguard Group 54

Fidelity Investments 55

Charles Schwab 55

E*Trade 56

Other brokerage houses 56

Presenting the Suppliers 57

It's okay to mix and match with caution 57

Check your passport 58

BlackRock Financial Management iShares 58

Vanguard ETFs 59

State Street Global Adviser's SPDRs 60

Invesco 61

Charles Schwab 63

First Trust 63

Other suppliers 64

Familiarizing Yourself with the Indexers 64

S&P Dow Jones Indices 64

MSCI 65

FTSE/Russell 65

CRSP 65

Bloomberg 66

Meeting the Middlemen 66

NYSE Arca 67

NASDAQ 67

BATS 67

Meeting the* Wannabe Middlemen 67

Commissioned brokers 67

Separately managed accounts 68

Annuities and life insurance products 68

Funds of funds 68

Part 2: Building the Stock (Equity) Side of Your Portfolio 69

Chapter 4: Risk Control, Diversification, and Some Other Things You Need to Know 71

Risk Is Not Just a Board Game 72

The trade-off of all trade-offs (safety versus return) 72

So just how risky are ETFs? 73

Smart Risk, Foolish Risk 74

How Risk Is Measured 76 Standard deviation:...