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. Mutual Funds & ETFs

    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. Mutual Funds & ETFs

    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.
  3. Mutual Funds & ETFs

    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.
  4. Mutual Funds & ETFs

    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.
  5. Active Trading Fundamentals

    The Risks and Rewards of Day Trading the UWTI (UWTI)

    Learn about the VelocityShares 3x Long Crude ETN, as well as its issuing company VelocityShares, and the potential risks and rewards of the ETN.
  6. Mutual Funds & ETFs

    TVIX vs. UVXY: Comparing Leveraged Volatility ETFs

    Learn about the characteristics of two leveraged volatility exchange-traded products, and discover a comparative analysis between the two products.
  7. Investing

    5 Unique Pure Beta ETNs to Consider (SBV, BCM)

    Learn about five unique Barclays Bank iPath Pure Beta exchange-traded notes (ETNs) and whether these ETNs are suitable for your investment objectives.
  8. Mutual Funds & ETFs

    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.
  9. Mutual Funds & ETFs

    DRR Vs. EUO: Comparing Short Europe ETFs

    Learn about how European investments have held up in 2016, and review comparative analysis between the Market Vectors and ProShares Short Euro ETFs.
  10. Mutual Funds & ETFs

    ETF/ETN Analysis: iPath S&P GSCI Crude Oil

    Learn about iPath S&P GSCI Crude Oil exchange-traded notes and how investors can use this ETN to profit from short to intermediate changes in oil prices.
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. 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 >>
  6. 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 >>
Hot Definitions
  1. Law Of Demand

    A microeconomic law that states that, all other factors being equal, as the price of a good or service increases, consumer ...
  2. Cost Of Debt

    The effective rate that a company pays on its current debt. This can be measured in either before- or after-tax returns; ...
  3. Yield Curve

    A line that plots the interest rates, at a set point in time, of bonds having equal credit quality, but differing maturity ...
  4. Stop-Limit Order

    An order placed with a broker that combines the features of stop order with those of a limit order. A stop-limit order will ...
  5. Keynesian Economics

    An economic theory of total spending in the economy and its effects on output and inflation. Keynesian economics was developed ...
  6. Society for Worldwide Interbank Financial Telecommunications ...

    A member-owned cooperative that provides safe and secure financial transactions for its members. Established in 1973, the ...
Trading Center