Entire Site
Free Trial
Safari Books Online is a digital library providing on-demand subscription access to thousands of learning resources.
- Create BookmarkCreate Bookmark
- Create Note or TagCreate Note or Tag
- PrintPrint
CHAPTER 8 - The ETFs That Aren’t ETFs > Exchange-Traded Notes
Exchange-Traded Notes
Exchange-traded vehicles may be a generic catch-all phrase for any ETF-like product that isn’t a ’40 Act investment company, but exchange-traded notes (ETNs) are a specific category of structured products. ETNs are neither the first ETVs (those were the HOLDRs), nor the first to track commodities or currencies. However, because the ETN structure lends itself to both commodities and currencies, which will be examined in detail later in the chapter, it’s worth explaining them first. That will make the comparisons easier as we go along.
Invented by Barclays Bank in 2006, the ETNs were created to make it easier for retail investors to invest in hard-to-access asset classes. Barclays Global Investors, a subsidiary of Barclays Bank, runs iShares, the largest family of ETFs. To differentiate the products, the ETNs received the family name iPaths. BGI has released commodity products under the iShares brand, but anything that doesn’t contain equities or bonds misses out on some of the tax advantages of ETFs—especially commodities and currency. And stocks in emerging markets have high spreads and aren’t necessarily liquid enough to be purchased in large amounts.
