Exchange Traded Notes: An Introduction

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

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

Posted: 21 May 2019

See all articles by Dean Diavatopoulos

Dean Diavatopoulos

Seattle University

James Felton

Central Michigan University - Department of Finance and Law

Colbrin Wright

Brigham Young University

Date Written: August 10, 2009


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.

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

JEL Classification: G10, G11, G12, G14

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:

Dean Diavatopoulos

Seattle University ( email )

901 12th Avenue
Seattle, WA 98122
United States

James Felton

Central Michigan University - Department of Finance and Law ( email )

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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