ETN - Exchange Traded Note

An Exchange Traded Note (ETN) is a senior, unsecured, unsubordinated debt security issued by an underwriting bank.  The returns of ETNs are normally linked to a market benchmark or strategy, less investor fees.

ETN - Exchange Traded Note

An Exchange Traded Note (ETN) is a senior, unsecured, unsubordinated debt security issued by an underwriting bank.  The returns of ETNs are normally linked to a market benchmark or strategy, less investor fees.

 

Exchange Traded Note Overview

There are four major types of Exchange Traded Notes:  commodity, currency, emerging market and strategy ETNs.  Commodity ETNs include energy, oil, and metals. Currency ETNs include the euro, British pound and Japanese yen.  Emerging markets include the India Index ETN.  Strategy ETNs are similar to alternative investment ETFs.  An example would be an Exchange Traded Note linked to the performance of the S&P 500 Buy/Write Index.



Market Vectors Chinese Renminbi/USD ETN (CNY)

Market Vectors Chinese Renminbi/USD ETN (CNY)

Exchange Traded Note Application

Exchange Traded Notes provide access to the returns of market benchmarks without the usual problems associated with Exchange Traded Funds (ETFs), such as tracking errors, liquidity of the underlying commodity, etc.



When an investor buys an ETN, the underwriting bank promises to pay the amount reflected in the index, minus fees upon maturity. Thus ETNs have an additional risk compared to an ETF;   that is if the underwriting bank goes bankrupt, the investment might lose value in the same way as a senior debt would.

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