- Paperback: 304 pages
- Publisher: McGraw-Hill Professional; 2 edition (1 Feb 2007)
- Language English
- ISBN-10: 0071484922
- ISBN-13: 978-0071484923
- Product Dimensions: 23 x 15.2 x 2.1 cm
- Amazon Bestsellers Rank: 717,968 in Books (See Top 100 in Books)
All About Index Funds
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More About the Author
Product Description
Product Description
All The Tools and Techniques You Need to Invest Successfully in High-Yield, Low-Risk Index Funds
The updated Second Edition of Richard Ferri's bestselling All About Index Funds offers individual investors an easy-to-use guide for capitalizing on one of today's hottest investing areas_index funds. This wealth-building resource provides essential information on index funds; expert advice on how to start investing; and winning strategies for high returns with low risk.
The Second Edition of All About Index Funds features:
- Updated tables, charts, and data on performance, fees, and new funds
- Step-by-step guidance on active indexing and discussion of its expanding role
- Coverage of all new U.S. equity indexes that have changed the dynamics of the index fund marketplace and a new chapter on commodities and commodity index funds
- Vanguard's revision of the indexes it uses for benchmarking
- Discussion of the increasing popularity of ETFs for effective asset allocation
From the Back Cover
All The Tools and Techniques You Need to Invest Successfully in High-Yield,
Low-Risk Index Funds
Low-Risk Index Funds
The updated Second Edition of Richard Ferri's bestselling All About Index
Funds offers individual investors an easy-to-use guide for capitalizing on
one of today's hottest investing areas_index funds. This wealth-building
resource provides essential information on index funds; expert advice on
how to start investing; and winning strategies for high returns with low
risk.
The Second Edition of All About Index Funds features:
Updated tables, charts, and data on performance, fees, and new funds
Step-by-step guidance on active indexing and discussion of its expanding
role
Coverage of all new U.S. equity indexes that have changed the dynamics of
the index fund marketplace and a new chapter on commodities and commodity
index funds
Vanguard's revision of the indexes it uses for benchmarking
Discussion of the increasing popularity of ETFs for effective asset
allocation
About the Author
Richard A. Ferri, CFA, is the Founder and CEO of Portfolio Solutions, LLC,
a fee-only investment firm serving high-net-worth individuals, families,
non-profit organizations, and corporate pension plans. Mr. Ferri is the
author of All About Asset Allocation and Protecting Your Wealth in Good
Times and Bad, both available from McGraw-Hill.
Inside This Book
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Front Cover | Copyright | Table of Contents | Excerpt | Index
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24 reviews
85 of 86 people found the following review helpful
Excellent Primer on Index Funds
19 Sep 2002
Format:Paperback
This...McGraw-Hill paperback will provide readers with a terrific return on their investment. Author Richard Ferri provides detailed information on all aspects of index funds as well as how to put together a rationale portfolio of index funds depending on your risk parameters.
This well organized easy to read 275-page book contains 16 chapters on everything you wanted to know about index funds, including:
- Different types of funds and their composition
All about exchange traded funds (ETFs), their features and advantages
Sector index funds, REIT index funds, Merrill Lynch HOLDRS
Global and international index funds
Bond index funds
Enhanced, leveraged and inverse index funds
Tax-advantaged index funds
- Indexes as benchmarks
- Advantages of index funds over standard mutual funds
- Comparison of index funds to actively managed funds for 5,10 and 20-year periods
Then Ferri details how to create your own customized index fund portfolio using an Internet server. He covers what you should realistically expect to earn from your portfolio based upon historical returns since 1950. Next, he reviews the critical subject of asset allocation and the necessity of having a diversified index portfolio that should be rebalanced each year.
Ferri provided guidance on defining your financial goals. He covers determining your future financial needs, developing your current earnings and earnings power, assigning asset allocation parameters, and then stress testing your bond and stock asset allocation. He provides a 5-step method to help determine your asset allocation (setting goals; making an inflation adjustment; determining a savings plan and required return; deciding on asset allocation; and assessing risk).
One chapter pinpoints how to design your index portfolio. He mentions that taxable and non-taxable portfolios should be managed differently. Ferri recommends a simple portfolio for a taxable account. He advises that more complex strategies be used in non-taxable accounts. Ferri illustrates a three-index portfolio and a high-income portfolio using REITs and High-Yield bonds.
The appendix contains a list of 28 low-cost index fund families with phone numbers, 14 useful investment advice and index fund websites, and 12 books about index funds. There is also a 9-page glossary and an 8-page index.
Overall, this book covers all the bases on index fund investing in an easy-to-read style. I highly recommend this book to investors who need to know about these very useful funds.
38 of 39 people found the following review helpful
Great Book on Index Funds
3 Jan 2006
Format:Paperback
Although I have been investing in and studying index mutual funds since 1990, I still learned a few things in this book.
I enjoyed Ferri's method of determining his client's risk tolerance. He puts his clients through one of our most recent Bear Markets, 1973-1974, and sees if they can stand the losses to their portfolio with a starting asset allocation. If they can't stand the losses, he adjusts the asset allocation to a lower risk allocation until they can stomach the losses.
I also enjoyed his explanation of Modern Portfolio Theory. His hypothetical example shows that a portfolio made up of stocks and bonds actually has a slightly higher return and slightly lower risk than you would expect using simple math.
Ferris is also willing to go out on a limb and predict returns for various asset classes and inflation for the next 30 years. He seems to agree with Buffett that stocks will deliver a nominal return of 8% versus the 70 year average of 11%. Of course Buffett predicted stock returns in the 1980's would be in single digits and the S&P returned a compounded nominal of 18%.
Ferri does a great job of explaining why index funds outperform actively managed funds over long periods of time.
All in all, it is a very informative book.
I would suggest companion books to supplement this book including The Richest Man in Babylon, Bogle on Mutual Funds, The Millionaire Next Door, The 4 Pillars of Investing, A Random Walk Down Wall Street, Wealth of Experience: Real Investors on what Works and What Doesn't, The Coffeehouse Investor, and the Armchair Millionaire.
I enjoyed Ferri's method of determining his client's risk tolerance. He puts his clients through one of our most recent Bear Markets, 1973-1974, and sees if they can stand the losses to their portfolio with a starting asset allocation. If they can't stand the losses, he adjusts the asset allocation to a lower risk allocation until they can stomach the losses.
I also enjoyed his explanation of Modern Portfolio Theory. His hypothetical example shows that a portfolio made up of stocks and bonds actually has a slightly higher return and slightly lower risk than you would expect using simple math.
Ferris is also willing to go out on a limb and predict returns for various asset classes and inflation for the next 30 years. He seems to agree with Buffett that stocks will deliver a nominal return of 8% versus the 70 year average of 11%. Of course Buffett predicted stock returns in the 1980's would be in single digits and the S&P returned a compounded nominal of 18%.
Ferri does a great job of explaining why index funds outperform actively managed funds over long periods of time.
All in all, it is a very informative book.
I would suggest companion books to supplement this book including The Richest Man in Babylon, Bogle on Mutual Funds, The Millionaire Next Door, The 4 Pillars of Investing, A Random Walk Down Wall Street, Wealth of Experience: Real Investors on what Works and What Doesn't, The Coffeehouse Investor, and the Armchair Millionaire.
25 of 25 people found the following review helpful
Indexing Handbook
17 Jan 2003
Format:Paperback|Amazon Verified Purchase
The basic idea of an index mutual fund is that it mimics the long term returns of the market. It does so with less risk, more simply, with lower costs, and greater consistency than the much greater number of actively managed (and widely promoted) funds available to investors. Tracking the markets rather than attempting to outperform them may seem, in Ferri's words, like "watching grass grow", but consistency over a long period means superior returns and eliminates the black hole of underperformance. Recent books by Larry E. Swedroe, William Bernstein, Charles D. Ellis, and others make more detailed cases for using the index fund strategy, but ALL ABOUT INDEX FUNDS provides needed nitty-gritty information about the rationale and composition of many indexes from which to develop an appropriate investment strategy. The extraordinary growth of exchange traded funds (ETF) that track market, country, and sector indexes have introduced both flexibility and confusion to the choices that are available. Ferri does a good job of identifying the major index providers, what their indexes represent, the funds that track their movement, and the potential overlap and inefficiencies that result from mixing index providers. A student of modern portfolio theory (MPT), Ferri is an advocate of diversifying investments across several asset classes that respond a little differently at different times to reduce volatility and improve overall returns. It follows that the most important allocation decision is the percentage mix of stocks and bonds. In Chapter 15, "Designing Your Index Fund Portfolio", these allocation issues are tackled in some detail. Suffice to say a typical Ferri index portfolio may consist of some percentage of US stocks, foreign stocks, US bonds, and Real Estate Investment Trusts. This book is not long enough to adequately cover all the topics Ferri addresses, but it is an excellent starting point.
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