FT Guide to Exchange Traded Funds and Index Funds: How to Use Tracker Funds in Your Investment Portfolio (The FT Guides)

Description

Since the first edition of The Financial Times Guide to ETFs was published in 2009, the number of ETFs in issue has doubled and ETFs are now common both on investor platforms and increasingly amongst financial advisors. This massive increase in demand has highlighted an urgent debate – just how dangerous are ETFs and how much do investors and advisers understand about the structure of the index tracker?   The second edition of this book attempts to answer this debate and is the indispensable bible on trackers for professional advisers and serious private investors.   This new edition also features a chapter based around the theme of Due Diligence and a new chapter on How to use ETFs and Index Funds for theLong-term, as well as a new Jargon busting section and a-new appendix looking at new ideas beginning to emerge. Cover The Financial Times Guide to Exchange Traded Funds and Index Funds About the author Contents Acknowledgements Publisher’s acknowledgements Foreword Introduction Welcome to the revolution – Investing 2.0 Why asset class investing will change the way we invest The believers The fall and decline of the active fund manager Don’t trust the manager Active fund management costs more CMH – the Costs Matter Hypothesis The remorseless rise of the indexers Why you need to use index tracking funds in your portfolio and how this book can help you Building your portfolio Full circle A quick primer on the theory – or how we got here Taking a random walk on the wild side Efficient markets, rational actors? The critics More risk, greater returns The rise of fundamentals-based index investing The efficient markets purists’ counter attack A middle way – the reality of relatively efficient markets Building the perfect index Structuring the revolution Building the perfect index – the FTSE 100? Putting it all together in an index fund Capturing the index The rise of ETFs Defining ETFs The European alternative: synthetic replication An ETF in action Stock lending: smoothing out returns? Phenomenal growth worldwide The future Understand what you invest in! Investing in commodities using index funds How to invest using index tracking funds Spot prices v the futures index The main commodity index providers Composite or not? The different types of returns on offer from ETCs The risks of investing in commodities The fiddly detail – risks, caveats and the indices A growing market Choosing an ETF Why might passive be suitable? Why use ETFs instead of index funds? Funds, notes, commodities or products? How does the fund track? How safe is my tracker? Investment cost is a key factor In summary The new fundamental indexing revolution The rise of the fundamentalists What are the choices? Understand what you are buying into with fundamental trackers Fundamental indexing: an insider’s perspective What is wrong with conventional indexing? Is there a better way to index? Book value Profit and loss Dividends Single-measure or blended, historic or forecast data The runners and riders Dimensional Fund Advisors Wisdom Tree Research Affiliates Fundamental Tracker Investment Management Why fundamental funds? On portfolios Introduction What’s the meaning of life? Why invest? A passive portfolio – why it matters? Risk Asset allocation More on fixed interest What about equity diversification? Timing your investment in the markets Rebalancing Conclusion Big theme investing and index funds The business cycle As themes go by … Waves not bubbles ‘It’s better to travel than arrive’: momentum investing works Diversify Globalisation International diversification works, too The big themes of the next decades? Create your own themes Active portfolios using ETFs Technical analysis and ETFs Using technical analysis to determine price entry Using technical analysis to determine stops Using technical analysis to determine price targets Using technical analysis for currency, bond and commodity ETFs Six golden rules Putting it all together Q1: To rebalance or not to rebalance? Should I constantly rebalance my portfolio? Q2: The consensus seems to be to buy and hold over the long term. Does that mean I should never attempt to time the market? Q3: I’m worried by the volatility of equities. Are shares really worth the extra risk? Q4: Should I only use index tracking funds to build my portfolio? Q5: How do I actually build a portfolio? Should I keep it simple? Keeping it really, really simple and lazy How’s your lifecycle? The all-in-one fund Using trackers as part of a wider investment process for advisers Summary The master portfolios 1 The Global Growth Portfolio 2 The Low Risk Portfolio 3 The Income Portfolio The other master portfolios 4 The Mid Risk Portfolio 5 The Adventurous Portfolio What do I do next? Where do the Essential 25 fit in? Simple, lazy portfolios from PortfolioReview Appendix: The Essential 25 FTSE 100 – UK Equities Featured ETFs Featured unit trusts FTSE All Share FTSE 250 – UK Mid Caps FTSE All Stocks Gilt FTSE Small Cap FTSE World exc UK DJ EuroStoxx 50 – European Shares Money Market Funds MSCI Emerging Markets Japan – TOPIX, MSCI Japan and Nikkei 225 DJ-UBS Agriculture FTSE UK Dividend Plus Comments S&P Global Water Global Property – FTSE NAREIT Developed Markets (Global) Property Index Series China – HSCEI and MSCI Infrastructure – S&P Global Infrastructure Index MSCI Latin America MSCI World Islamic Index S&P Global Forestry and Timber S&P Global Clean Energy S&P 500 S&P Select Frontier Markets Brent Oil Gold iBoxx Sterling Corporate Bonds References Index