Ten years on from Lehman's collapse, this article summarises the problems with exchange-traded notes. Although they sound and act a lot like ETFs they are in fact quite different, most significantly in that they do not hold assets. They are in fact credit issues whose return is determined by the performance on the underlying index. As such they are unsecured liabilities of the issuer and, if that issuer fails, the ETN investor may be seriously our of luck. It's a contract, not a fund.
https://www.etf.com/sections/features-a ... nopaging=1
I never liked the idea of ETNs for this reason. However they are popular for certain specialised purposes. Many commodity vehicles are structured in ETN form because of the contango/backwardation problem with futures. Another is where the underlying has a complex tax structure, like MLPs, which gets a mention in the article.
Anyway, my word on this is always stick to ETFs.
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ETFs versus ETNs
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