The Active Asset Allocator

Book excerpt: How investors can maximize returns and minimize risk using exchange traded funds and the latest asset allocation techniques Used wisely, exchange traded funds (ETFs) can make it easy to customize an asset allocation strategy for an investor's specific situation. They're a perfect way to divide money among various asset classes, such as stocks, bonds, currencies, and real estate. This groundbreaking book shows investors how and why to use ETFs as their primary investment vehicle. The benefits include instant diversification, transparency, tax efficiency, low costs, and intraday pricing. ETFs for the stock market combine the best features of individual stocks and mutual funds. They allow investors to easily buy and sell portions of the total market-offering more diversity than individual stocks, without the expenses and hassles of mutual funds. For example, the ETF called SPY (also known as Spyders) represents the largest five hundred stocks; an investor who buys shares of SPY is actually buying five hundred stocks rolled into one. There are hundreds of ETFs in sectors ranging from energy to financials to technology. The Active Asset Allocator explains how to balance the risks and rewards of various asset classes to match an investor's current goals. It also shows how to rebalance a portfolio over time, adjusting the allocation to generate higher returns with lower risk as market conditions change.