The Institutional ETF Toolbox. Balchunas Eric

Balchunas

      The Institutional ETF Toolbox

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THE INSTITUTIONAL ETF TOOLBOX

How Institutions Can Understand and Utilize the Fast-Growing World of ETFs

Eric Balchunas

      Cover image: 3d blue stock chart © Maxphotograph/iStockphoto;

      Red toolbox © John Solie/iStockphoto; Digital font © lekkyjustdoit/iStockphoto;

      Dark gray abstract background © Kritchanut/iStockphoto

      Cover design: Wiley

      Copyright © 2016 by Eric Balchunas. All rights reserved.

      Published by John Wiley & Sons, Inc., Hoboken, New Jersey.

      Published simultaneously in Canada.

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       Library of Congress Cataloging-in-Publication Data:

      ISBN 9781119093862 (Hardcover)

      ISBN 9781119094104 (ePDF)

      ISBN 9781119094241 (ePub)

      Limit of Liability/Disclaimer of Warranty: The publisher and the author make no representations or warranties with respect to the accuracy or completeness of the contents of this work and specifically disclaim all warranties, including without limitation warranties of fitness for a particular purpose. No warranty may be created or extended by sales or promotional materials. The advice and strategies contained herein may not be suitable for every situation. This work is sold with the understanding that the publisher is not engaged in rendering legal, accounting, or other professional services. If professional assistance is required, the services of a competent professional person should be sought. Neither the publisher nor the author shall be liable for damages arising herefrom. The fact that an organization or web site is referred to in this work as a citation and/or a potential source of further information does not mean that the author or the publisher endorses the information the organization or web site may provide or recommendations it may make. Further, readers should be aware that Internet web sites listed in this work may have changed or disappeared between when this work was written and when it is read.

      The information provided to you herein should be viewed as informational and represents the opinions of each individual, not associated company, and is not intended to be considered a recommendation to participate in any particular trading strategy, or deemed to be an offer or sale of any investment product, and it should not be relied on as such.

For Trang, Gabriel, Elliott, and Mom and Dad

      Acknowledgments

      I realize I’m not winning an Oscar here, but I feel some people need a shout-out. This book wouldn’t have been written without both direct and indirect help from the following people.

      In terms of direct help, I owe a huge thanks to Suzanne Woolley, my amazing editor at Bloomberg. She not only taught me a lot about writing, but also connected me to Stephen Isaacs of Bloomberg Press. If not for Suzanne’s stamp of approval – and Stephen’s guidance – this book would not exist. Second, I would like to thank Matt Kelly and Doug Kenney in Bloomberg Global Data. They have been supportive of me for years now – not only in this book project but also encouraging me to take opportunities necessary to turn my job into a career.

      In terms of the book itself, Sara Prager and Ryan Kreger deserve the biggest thanks. They were the only two people (poor souls) who read the entire first draft, which was double the length it is now. This was crucial in figuring out what to chop out and what to expand on

      I also got great feedback on sections of the book from my Bloomberg colleagues James Seyffart and Michael Baradas. I also have to thank our wonderful interns Madeleine Hart and Kayla Glenn, who did some serious data crunches for the book and elevated the formatting for the tables and figures.

      Many people from the ETF industry helped me immensely. There are too many to list, but special thanks should go to Wes Gray, Daniel Gamba, Brendan Ahern, Kathryn Bernhardt, Mike Eschmann, Paris Smith, Steven Bloom, Howard Kramer, and Robbie Ross. I interviewed over 60 people for this book and all of them were very helpful as well. While you may see two to three quotes from each person, they were drawn from an hour-plus interview. And what I didn’t quote was highly useful background material that seeped into the overall content in some shape or form. So, big thanks to all of them.

      I also have to give a special thanks to David Abner, who is a friend and a mentor within the industry. Dave has written two books on ETFs, which I’ve read multiple times. While this book is largely a different topic, his work and his attitude has influenced me and inspired me in subtle ways.

      This book also would not exist if not for some folks in Bloomberg’s media operation, namely, Catherine Cowdery of Bloomberg Radio, as well as the folks over at Bloomberg TV – namely, Ted Fine and Jonah Davis who first let me on the air to talk ETFs. Every Friday for five years now I’ve traveled up to New York City to do a weekly segment on ETFs for radio and TV. This consistent deadline was a huge motivating force for me; it sent me into every nook and cranny of the ETF world. All told, I’ve done over 500 segments, and all of the notes from