Visual Guide to ETFs

Visual Guide to ETFs

David J. Abner

Language: English

Pages: 257

ISBN: 1118204654

Format: PDF / Kindle (mobi) / ePub

An Exchange-Traded Fund (ETF)—a security that tracks an index, a commodity, or a basket of assets like an index fund, but trades like a stock on an exchange—offers diversification of an index fund, as well as the ability to sell short, buy on margin, and purchase as little as one share. Giving financial advisors, institutional asset managers, traders, and other investment professionals the information they need to get the most out of ETF opportunities, the Bloomberg Visual Guide to ETFs covers the subject in a highly visual manner.
















Investment Products KEY POINT: Because the trading of the portfolio is now more in the control of the investors, it is important that they take control of this aspect when using ETFs. When you trade and how you trade your ETF, whether in an individual trading account or in a multi-billion dollar portfolio, is a critical piece of your investment process and will affect your overall performance. within the fund portfolio, they are actual trades that can generate realized gains or losses in the

also see that from the 8th to the 9th, and then from the 10th to the 11th, there were no changes in the shares outstanding of the fund. This indicates that on those two days, even though a lot of volume traded on the exchanges, this did not translate back to a creation or redemption for the ETF. Then there was a large creation on the 10th as indicated by the jump in the shares outstanding number, but this is not clearly identifiable by the volume numbers. Shares Outstanding Can Be a Misleading

underlying the fund are closed, the closing price for those assets will be used for the calculation of IV. Exhibit 2.11 Looking at Historical NAV (NV HP) Reprinted with permission from Bloomberg. Copyright 2012 Bloomberg L.P. All rights reserved. 54 ■ CHAPTER 2 Understanding How ETF Portfolios Work Exhibit 2.12 Indicative Value DES Screenshot Reprinted with permission from Bloomberg. Copyright 2012 Bloomberg L.P. All rights reserved. Visual Guide to ETFs important an investment vehicle

What must be ascertained is the shares that need be purchased to bring the IWM portfolio up to 1:1 with the short interest in the ETF. In this case, you are going to calculate the difference in the number of shares held by the fund versus those represented by the short interest. In Exhibit 3.6, you can see a similar table with the addition of a column showing the difference between the shares held by the fund and the shares required to represent the excess shares short. The column highlighted on

Divide that by the number of days. 92 ■ CHAPTER 4 Trading and Liquidity of the ETF Markets Exhibit 4.5 ETF Volume—International (HP) Chart reprinted with permission from Bloomberg. Copyright 2012 Bloomberg L.P. All rights reserved. baskets that can be used to offset positions in the ETF itself. In Chapter 1, I explained that the spread of an S&P 500 ETF, at .01, is tighter than the actual basket spread that is .04 wide. This is made possible by the additional sources of good hedges such as

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