Index Investing: From Theory to Practice · Dr MAI Huu Minh, TRAN Phan Bao Ngoc & HUYNH Nguyen Quoc BuuChapter 18 of 37 · Module 5: Index products
CHAPTER 18
Index Funds and ETFs
Structures, mechanics, costs and how to choose
Opening question
“Twenty funds track the same index. Their names look alike, their charts look alike. Which one should I buy — and does it matter?”
In this chapter
- How the index fund grew from an academic idea to the core of world investing
- Index mutual funds and ETFs: structures and differences
- How an ETF works: creation, redemption and arbitrage
- Full replication, sampling and synthetic replication
- Tracking difference, tracking error and the total cost of ownership
- The families of index funds, including leveraged and inverse products
- A practical scorecard for choosing a fund
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This chapter is in the full book
Chapter 1 is free to read online. The full text of chapter 18 — with its tables, figures, worked examples and practice lab — is available in the complete edition of Index Investing: From Theory to Practice (Volume 1, NXW Investment Library).
Read Chapter 1 freeGet the full book — contact@nxw.vnSections of this chapter
18.1 From an idea to an industry
18.2 Two structures: index mutual funds and ETFs
18.3 How an ETF works
18.4 How funds replicate an index
18.5 Measuring how well a fund tracks its index
18.6 The total cost of owning a fund
18.7 The families of index funds
18.8 Leveraged and inverse ETFs
18.9 Choosing an index fund: a scorecard