Acknowledgments xiii Introduction: Institutions and ETFs xv SECTION I: THE ETF PHENOMENON CHAPTER 1 Why Are ETFs So Popular? 3 Low Cost 4 Liquidity 6 Tax Effi ciency 8 Transparency 9 Diversification 11 Easy Asset Allocation 13 Standardization 14 Democratic 16 No Emotion 17 Passive Investing 17 Flexibility 19 Anonymity 20 Price Discovery 21 Fiduciary Vehicles 23 Battle Proven 24 Convenience 24 Notes 25 CHAPTER 2 ETF Growth 27 Asset Growth 27 ETF Assets in Perspective 29 Trading Growth 30 Product Growth 34 Notes 36 CHAPTER 3 ETF Mechanics 37 The Story of the ETF 38 The Creation/Redemption Process 42 AMEX Wasn't Alone 44 Finally Ready for Launch 46 Notes 51 CHAPTER 4 Institutional Usages 53 Cash Equitization 55 Manager Transitions 60 Portfolio Rebalancing 63 Portfolio Completion 63 Liquidity Sleeves 64 Shorting/Hedging 66 Long and Lend 70 Tactical Moves 72 In-Kind Creation/Redemption 74 Bespoke ETFs 77 Tax-Loss Harvesting 82 Long-Term Allocation 83 Personal Usage 87 Notes 89 CHAPTER 5 ETF Due Diligence 91 Exposure 93 Cost 100 Liquidity 119 Risk 130 Regulatory Structure 133 ETF Issuers 136 ETF Ratings 138 Notes 140 SECTION II: THE ETF TOOLBOX 143 CHAPTER 6 U.S. Stock ETFs 145 Large Caps 146 Mid Caps 155 Small Caps 156 Broad Market 159 IPOs 162 Sector and Industry ETFs 165 The Tech Sector 166 Industries 175 Thematic ETFs 180 Notes 189 CHAPTER 7 Smart Beta 191 Controversy 192 Smart Beta versus Active Management 193 Growth and Value 196 Fundamentally Weighted ETFs 197 Single Factors 199 Notes 204 CHAPTER 8 International/Global ETFs 205 International Developed Markets 206 Global 209 Emerging Markets 212 The First Movers 212 Second-Generation EM 217 Next-Generation EM ETFs 221 Currency-Hedged ETFs 225 Single-Country ETFs 233 China 241 Notes 248 CHAPTER 9 Fixed Income 251 Regulations 253 Aggregate Bond ETFs 258 Treasuries 261 Mortgage Backed Securities 267 Municipals 268 Corporate 270 Senior Loans 273 Interest Rate-Hedged ETFs 278 Multi-Asset Income ETFs 281 International Debt 282 Notes 284 CHAPTER 10 Alternatives 285 Hedge Fund Strategies (aka "Liquid Alts") 286 Commodity ETFs 293 Physically Backed Commodity ETFs 293 Futures-Based Commodity ETFs 300 Notes 308 CHAPTER 11 Leveraged, Inverse, and VIX 309 Leveraged ETFs 309 The VIX 318 Notes 324 CHAPTER 12 Actively Managed ETFs 325 Fixed Income 327 Equity 329 Notes 334 Conclusion: Five Takeaways 335 Note 340 About the Author 341 Index 343.
The Institutional ETF Toolbox : How Institutions Can Understand and Utilize the Fast-Growing World of ETFs