Exchange Traded Notes - ETN

Loading the player...

What are 'Exchange Traded Notes - ETN'

A type of unsecured, unsubordinated debt security that was first issued by Barclays Bank PLC. This type of debt security differs from other types of bonds and notes because ETN returns are based upon the performance of a market index minus applicable fees, no period coupon payments are distributed and no principal protections exists.

BREAKING DOWN 'Exchange Traded Notes - ETN'

The purpose of ETNs is to create a type of security that combines both the aspects of bonds and exchange traded funds (ETF). Similar to ETFs, ETNs are traded on a major exchange, such as the NYSE during normal trading hours. However, investors can also hold the debt security until maturity. At that time the issuer will give the investor a cash amount that would be equal to principal amount (subject to the day's index factor).

One factor that affects the ETN's value is the credit rating of the issuer. The value of the ETN may drop despite no change in the underlying index, instead due to a downgrade in the issuer's credit rating.

RELATED TERMS
  1. Unsubordinated Debt

    A loan or security that ranks above other loans or securities ...
  2. Exchange Traded Products – ETP

    A type of security that is derivatively-priced and which trades ...
  3. Secured Bond

    A type of bond that is secured by the issuer's pledge of a specific ...
  4. Security

    A financial instrument that represents an ownership position ...
  5. Bond

    A debt investment in which an investor loans money to an entity ...
  6. Income Bond

    A type of debt security in which only the face value of the bond ...
Related Articles
  1. ETFs & Mutual Funds

    3 Reasons to Consider an ETN vs. an ETF in Your Portfolio

    Understand the differences between standard exchange-traded funds and exchange-trade notes, and learn what potential advantages exist through ETN investments.
  2. ETFs & Mutual Funds

    The Risks of Exchange-Traded Notes

    Learn exactly what the principal advantages and risks, such as tax advantages and credit risk, for investors considering investing in ETNs.
  3. ETFs & Mutual Funds

    Understanding Exchange-Traded Notes

    An exchange-traded note, or ETN, is a debt security that bases its returns on the performance of a market index.
  4. ETFs & Mutual Funds

    Exchange Traded Notes: An Alternative To ETFs

    ETNs offer yet another way to track an index. Find out what they have to offer, and what's at stake.
  5. ETFs & Mutual Funds

    ETN Credit Risk May Outweigh Benefits For Some

    Exchange-traded notes have many benefits, but they may not be suited to risk-averse investors.
  6. ETFs & Mutual Funds

    CEFL: UBS ETRACs Mortgage REIT ETN Analysis

    Read an analysis of the UBS ETRACS Monthly Pay 2xLeveraged Closed-End Fund ETN, and learn about the ETN's characteristics and performance.
  7. ETFs & Mutual Funds

    JJE vs. UBN: Comparing Energy ETFs

    Take a look at an overview, comparison and evaluation of two lesser-known commodity ETFs that offer exposure to the energy sector.
  8. ETFs & Mutual Funds

    MORL: UBS ETRACs Mortgage REIT ETN Analysis

    Learn about the UBS ETRAC Mortgage REIT ETN, and about the investments the ETN makes and its distribution and performance history.
  9. ETFs & Mutual Funds

    ETF/ETN Analysis: Natural Gas Subindex

    Discover an analysis of the iPath Bloomberg Natural Gas Subindex ENT, and learn about its characteristics and how it seeks to track its underlying index.
  10. ETFs & Mutual Funds

    The Top 3 ETFs For Investing in Livestock (COW, UBC)

    Discover the basic information on the three primary exchange traded funds that offer investors exposure to investments in the livestock market.
RELATED FAQS
  1. What is the best ETN for trading mid-cap stocks?

    Explore the world of exchange-traded notes (ETN) and some of the potential risks involved for investors. Find out how ETNs ... Read Answer >>
  2. How do I evaluate a debt security?

    Look at a brief overview of the important factors to consider before purchasing a debt security, such as a corporate or government ... Read Answer >>
  3. In the context of a bond, what does the principal refer to?

    Get introduced to the world of bond investing and learn what the term "principal" means in reference to a corporate or government ... Read Answer >>
  4. What forms of debt security are available for the average investor?

    Discover the various different types of debt securities, issued by government entities or corporations, that are available ... Read Answer >>
  5. What is the difference between secured and unsecured debt?

    Understand the difference between secured and unsecured debt and how the reliability and trustworthiness of the issuing entity ... Read Answer >>
  6. How important is credit rating on a fixed income security?

    Learn how credit ratings for fixed-income securities impact the yield and provide guidance for the amount of risk for the ... Read Answer >>
Hot Definitions
  1. Duration

    A measure of the sensitivity of the price (the value of principal) of a fixed-income investment to a change in interest rates. ...
  2. Dove

    An economic policy advisor who promotes monetary policies that involve the maintenance of low interest rates, believing that ...
  3. Cyclical Stock

    An equity security whose price is affected by ups and downs in the overall economy. Cyclical stocks typically relate to companies ...
  4. Front Running

    The unethical practice of a broker trading an equity based on information from the analyst department before his or her clients ...
  5. After-Hours Trading - AHT

    Trading after regular trading hours on the major exchanges. The increasing popularity of electronic communication networks ...
  6. Omnibus Account

    An account between two futures merchants (brokers). It involves the transaction of individual accounts which are combined ...
Trading Center