Abstract

http://ssrn.com/abstract=1408173
 
 

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Exchange Traded Notes: An Introduction


Dean Diavatopoulos


Villanova University - Department of Finance

James Felton


Central Michigan University - Department of Finance and Law

Colbrin Wright


Brigham Young University

August 10, 2009

Journal of Investing, Vol. 19, No. 2 (Summer), 2010, 27-37
Journal of Index Investing, Vol. 1, No. 1 (Summer), 2010, 164-175

Abstract:     
The first Exchange Traded Note (ETN) was introduced in 2006. Since then, at least 64 other ETNs have been issued, with more announced. This financial security, which is growing in number and popularity, is often confused with Exchange Traded Funds (ETFs) and seems to be largely misunderstood by the general investing public and even by institutional investors and academicians. Since no academic work has been published on the subject, our paper offers a seminal introduction to ETNs. We provide five basic categories of information related to ETNs: (1) descriptive information about ETNs, (2) fine print related to ETNs that we believe investors should understand before purchasing shares, (3) a few simple examples of ETNs that are available, (4) a simple analysis of how closely ETN market prices track their indicative values (something akin to NAV) and (5) a discussion of why ETNs may appeal to various investor classes. We believe our work will help investment professionals, individual investors, and academicians better understand ETNs, and we believe our work will also provide the catalyst for much future empirical work on these financial securities.

Number of Pages in PDF File: 19

Keywords: exchange-traded notes, ETNs, exchange-traded funds, tracking error, risk and performance, active management

JEL Classification: G10, G11, G12, G14

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Date posted: May 21, 2009 ; Last revised: February 25, 2013

Suggested Citation

Diavatopoulos, Dean and Felton, James and Wright, Colbrin, Exchange Traded Notes: An Introduction (August 10, 2009). Journal of Investing, Vol. 19, No. 2 (Summer), 2010, 27-37 . Available at SSRN: http://ssrn.com/abstract=1408173

Contact Information

Dean Diavatopoulos
Villanova University - Department of Finance ( email )
800 Lancaster Avenue
Villanova, PA 19085-1678
United States
James Felton
Central Michigan University - Department of Finance and Law ( email )
332 Sloan Hall
Mount Pleasant, MI 48859
989-774-3269 (Phone)
989-774-6456 (Fax)
Colbrin Wright (Contact Author)
Brigham Young University ( email )
United States
(801) 422 1224 (Phone)
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