Swap-Based ETFs: What Are the Risks?
Monday's post discussed the inner workings of the two swap-based ETFs launched by Horizons in late 2010. Many investors are understandably concerned about the risks involved in these rather complicate [...]
Understanding Swap-Based ETFs
Last fall, Horizons Exchange Traded Funds launched two innovative new ETFs. Rather than simply holding the stocks in the indexes they track, these funds use a derivative called a “swap” to get exposur [...]
Letting You In On a Big Secret
Joel Greenblatt has a sense of humour—I’ll grant him that. In The Big Secret for the Small Investor (Wiley, 2011), he pokes fun at the crass title of his previous book, You Can Be a Stock Market Geniu [...]
Fundamental Indexing for Corporate Bonds
On Monday, I took issue with the argument that cap-weighted bond indexes are fatally flawed. Rob Arnott, the creator of fundamental indexing, has argued that the classic model is “patently ridiculous. [...]
Are Bond Index Funds Stupid?
When Rob Arnott, the creator of fundamental indexing, spoke in Toronto last week, his presentation focused exclusively on equities. When he took questions at the end of his presentation, I asked him a [...]
Fundamental Indexing in the Real World
Earlier this week I discussed the promise of fundamental indexing. This strategy takes aim at the shortcomings of traditional cap-weighted indexes, which overweight growth stocks and are prone to bubb [...]
The Promise of Fundamental Indexing
Last Friday, I had the pleasure of attending a talk by Rob Arnott, the creator of the Research Affiliates Fundamental Indexes (RAFI). If you’re not familiar with fundamental indexing, here’s a primer. [...]
How to Track Down Tracking Error
How do you measure the performance of an index fund? That sounds like a simple question, but it’s one I think many investors still have trouble with. Otherwise I wouldn’t routinely get questions like, [...]
A Case Study in Currencies
In my last post, I explained that US-listed ETFs that hold overseas stocks do not expose Canadians to fluctuations in the US dollar. This is an important idea to understand if you’re comparing ETFs th [...]
Currency Hedging in International Funds
Currency hedging can be confusing for investors who use index funds and ETFs that hold foreign stocks or bonds. The basic idea, which I have written about before, is not terribly hard to understand. I [...]
