What are the benefits and risks of investing in exchange-traded notes (ETNs) compared with ETFs.
Topics covered include:
- How big is the market for ETNs compared with ETFs.
- How ETNs can do a better job tracking their target index than ETFs.
- Why ETNs can be more tax-efficient than ETFs..
- How ETNs have counterparty risk, pricing risk, and liquidity risk.
- Under what circumstances would an ETN be preferred over an ETF.
Thanks to WIX
for sponsoring the episode.
For show notes and more information on this episode click here
- [0:21] ETPs, ETFs, and ETNs—which is the most popular?
- [3:10] Exchange-Traded Notes exhibit low tracking error.
- [5:28] ETNs are vastly more tax-efficient than ETFs.
- [6:14] Examples of Exchange Traded Notes.
- [10:16] Should there be a default-risk discount on ETNs?
- [13:34] Why there is issuance and closure risk with ETNs.
- [17:21] Clarification on the term “Net Asset Value” when referring to ETNs.
- [17:58] The issues of illiquidity risks and high fees.
- [20:46] Exchange Traded Notes are a niche product.