When ETNs Are Better Than ETFs

As the universe of exchange-traded products has expanded considerably in recent years, investors have become more aware of the nuances between the various types of investment vehicles. Under the “ETF umbrella” are a number of product structures that aren’t true 1940 Act exchange-traded funds, including unit investment trusts (UITs) and grantor trusts. Also included are exchange-traded notes (ETNs), debt securities that are similar in many ways to their ETF cousins but very different in others. ETNs are debt securities issued by financial institutions such as Barclays, Credit Suisse, and UBS. But unlike most debt instruments, the value of these securities is linked to the value of an underlying index; as the benchmark increases, so too does the value of the exchange-traded note. As such, the exposure offered ETNs is similar to the exposure of passive ETFs–both deliver returns that reflect the performance of an index [also see The Basics Of [...] Click here to read the original article on ETFdb.com. Related Posts: Gold ETF For Trend Followers (TBAR) Debuts Credit Suisse Adds Leveraged Merger Arb ETN (CSMB) More Thoughts On MLP ETFs/ETNs Using ETFs To Access Alternatives RBS Launches Mid Cap TrendPilot ETN (TRNM)