{"id":660,"date":"2021-07-08T13:27:09","date_gmt":"2021-07-08T13:27:09","guid":{"rendered":"https:\/\/investwithanedge.com\/?page_id=660"},"modified":"2021-07-08T13:27:09","modified_gmt":"2021-07-08T13:27:09","slug":"etns-riskier-than-they-look","status":"publish","type":"page","link":"https:\/\/investwithanedge.com\/etns-riskier-than-they-look\/","title":{"rendered":"ETNs – Riskier Than They Look"},"content":{"rendered":"

\"\"Are all of your ETF holdings truly exchange-traded funds? \u00a0Or, are some of them exchange-traded\u00a0notes,<\/em>\u00a0otherwise known as\u00a0ETNs?\u00a0 Chances are, you might not even know.\u00a0 However, this knowledge is crucial if you want to get a handle on the risks associated with your holdings.<\/p>\n

ETNs\u00a0are unsecured debt securities – bonds.\u00a0 Even if your ETN is tracking a stock index or a commodity index, you are still holding a bond, an unsecured note.\u00a0 If the issuer defaults or declares bankruptcy,\u00a0you have no recourse<\/em>\u00a0except to stand in line with all the other unsecured creditors and hope that some day you might see a partial return of your investment.<\/p>\n

Think this is unlikely?\u00a0 Think again.\u00a0 On September 12, 2008, Lehman Brothers declared bankruptcy.\u00a0 ETN owners may not have known it at the time, but Lehman was the issuer of three ETNs (see table of ETN closures below).<\/p>\n

This is very different from investing in ETFs.\u00a0 ETFs are set up as independent legal entities.\u00a0 The money received by the fund is used to buy securities, and the assets of the fund are kept separate from the issuer and sponsor of the fund.\u00a0 If the issuer of an ETF goes under, then the fund just hires a new manager.\u00a0 That structure does not exist with ETNs.<\/p>\n

So, how can you tell if what you own is an ETF or an ETN?\u00a0 The best way of course, is to read the prospectus.\u00a0 However, I know of far too many investors who have never done that.\u00a0 Instead, they tend to look at fund summaries and fact sheets.\u00a0 Others might put their expensive subscription to Morningstar to work.\u00a0 But guess what, Morningstar does not make a distinction between ETFs and ETNs.\u00a0 However, Morningstar does\u00a0append the letters \u201cETN\u201d to the names of about two-thirds of them.<\/p>\n

At the end of 2008, the number of U.S. listed exchange-traded products\u00a0totaled 845, consisting of 760 ETFs and 85 ETNs<\/a>.\u00a0 The comprehensive list of ETNs appears below.\u00a0 The name of the issuer is often unrelated to the name of the ETN, and in many cases may surprise you.\u00a0 However, these are the names you need to know, because that is where the risk of default lies.<\/p>\n

There are credit ratings available for the ETN issuers.\u00a0 However, none of those ratings are repeated here due to concerns of accuracy and timeliness.\u00a0 This is a fast-moving market, and the fate of an issuer can change quickly.\u00a0 Furthermore, none of the issuers will announce any concerns of ongoing viability for fear of a run on their assets that will surely put them under.<\/p>\n

U.S. LISTED ETNS AS OF JAN. 27, 2009<\/h2>\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n
Ticker<\/th>\nName<\/th>\nNote Issuer<\/th>\n<\/tr>\n<\/thead>\n
ADZ<\/td>\nPowerShares DB Agriculture Short ETN<\/td>\nDeutsche Bank AG, London Branch<\/td>\n<\/tr>\n
AGA<\/td>\nPowerShares DB Agriculture Double Short ETN<\/td>\nDeutsche Bank AG, London Branch<\/td>\n<\/tr>\n
AGF<\/td>\nPowerShares DB Agriculture Long ETN<\/td>\nDeutsche Bank AG, London Branch<\/td>\n<\/tr>\n
AYT<\/td>\nBarclays GEMS Asia 8 ETN<\/td>\nBarclays Bank, PLC.<\/td>\n<\/tr>\n
BAL<\/td>\niPath DJ-AIG Cotton ETN<\/td>\nBarclays Bank, PLC.<\/td>\n<\/tr>\n
BDD<\/td>\nPowerShares DB Base Metals Dbl Lg ETN<\/td>\nDeutsche Bank AG, London Branch<\/td>\n<\/tr>\n
BDG<\/td>\nPowerShares DB Base Metals Lng ETN<\/td>\nDeutsche Bank AG, London Branch<\/td>\n<\/tr>\n
BOM<\/td>\nPowerShares DB Base Metals Dbl Sh ETN<\/td>\nDeutsche Bank AG, London Branch<\/td>\n<\/tr>\n
BOS<\/td>\nPowerShares DB Base Metals Sht ETN<\/td>\nDeutsche Bank AG, London Branch<\/td>\n<\/tr>\n
BSC<\/td>\nElements Ben Graham Small Cap Value ETN<\/td>\nDeutsche Bank AG<\/td>\n<\/tr>\n
BSR<\/td>\nBearLinx Alerian MLP Select ETN<\/td>\n(see notes)<\/td>\n<\/tr>\n
BVL<\/td>\nElements Ben Graham Large Cap Value ETN<\/td>\nDeutsche Bank AG<\/td>\n<\/tr>\n
BVT<\/td>\nElements Ben Graham Total Mkt Value ETN<\/td>\nDeutsche Bank AG<\/td>\n<\/tr>\n
BWV<\/td>\niPath CBOE S&P; 500 BuyWrite Index ETN<\/td>\nBarclays Bank, PLC.<\/td>\n<\/tr>\n
CNY<\/td>\nMarket Vectors Chinese Renminbi\/USD ETN<\/td>\nMorgan Stanley<\/td>\n<\/tr>\n
COW<\/td>\niPath DJ AIG Livestock Total Return ETN<\/td>\nBarclays Bank, PLC.<\/td>\n<\/tr>\n
DAG<\/td>\nPowerShares DB Agriculture Double Long ETN<\/td>\nDeutsche Bank AG, London Branch<\/td>\n<\/tr>\n
DDP<\/td>\nPowerShares DB Commodity Short ETN<\/td>\nDeutsche Bank AG, London Branch<\/td>\n<\/tr>\n
DEE<\/td>\nPowerShares DB Commodity Double Short ETN<\/td>\nDeutsche Bank AG, London Branch<\/td>\n<\/tr>\n
DGP<\/td>\nPowerShares DB Gold Double Long ETN<\/td>\nDeutsche Bank AG, London Branch<\/td>\n<\/tr>\n
DGZ<\/td>\nPowerShares DB Gold Short ETN<\/td>\nDeutsche Bank AG, London Branch<\/td>\n<\/tr>\n
DJP<\/td>\niPath DJ AIG Commodity Total Return ETN<\/td>\nBarclays Bank, PLC.<\/td>\n<\/tr>\n
DOD<\/td>\nElements Dogs of the Dow Total Return ETN<\/td>\nDeutsche Bank AG<\/td>\n<\/tr>\n
DPU<\/td>\nPowerShares DB Commodity Long ETN<\/td>\nDeutsche Bank AG, London Branch<\/td>\n<\/tr>\n
DRR<\/td>\nMarket Vectors Double Short Euro ETN<\/td>\nMorgan Stanley<\/td>\n<\/tr>\n
DTO<\/td>\nPowerShares DB Crude Oil Dbl Shrt ETN<\/td>\nDeutsche Bank AG, London Branch<\/td>\n<\/tr>\n
DXO<\/td>\nPowerShares DB Crude Oil Dbl Long ETN<\/td>\nDeutsche Bank AG, London Branch<\/td>\n<\/tr>\n
DYY<\/td>\nPowerShares DB Commodity Double Long ETN<\/td>\nDeutsche Bank AG, London Branch<\/td>\n<\/tr>\n
DZZ<\/td>\nPowerShares DB Gold Double Short ETN<\/td>\nDeutsche Bank AG, London Branch<\/td>\n<\/tr>\n
EEH<\/td>\nElements Spec LgCap US Sector Mo ETN<\/td>\nSwedish Export Credit Corp.<\/td>\n<\/tr>\n
ERO<\/td>\niPath EUR\/USD Exchange Rate ETN<\/td>\nBarclays Bank, PLC.<\/td>\n<\/tr>\n
FUD<\/td>\nE-TRACS CMCI Food Total Return ETN<\/td>\nUBS AG<\/td>\n<\/tr>\n
FUE<\/td>\nElements MLCX Biofuels ETN<\/td>\nSwedish Export Credit Corp.<\/td>\n<\/tr>\n
GAZ<\/td>\niPath DJ AIG Natural Gas Total Return ETN<\/td>\nBarclays Bank, PLC.<\/td>\n<\/tr>\n
GBB<\/td>\niPath GBP\/USD Exchange Rate ETN<\/td>\nBarclays Bank, PLC.<\/td>\n<\/tr>\n
GCE<\/td>\nClaymore CEF Index GS Connect ETN<\/td>\nThe Goldman Sachs Group, Inc.<\/td>\n<\/tr>\n
GOE<\/td>\nElements MLCX Gold ETN<\/td>\nCredit Suisse<\/td>\n<\/tr>\n
GRN<\/td>\niPath Global Carbon ETN<\/td>\nBarclays Bank, PLC.<\/td>\n<\/tr>\n
GRU<\/td>\nElements MLCX Grains Total Return ETN<\/td>\nSwedish Export Credit Corp.<\/td>\n<\/tr>\n
GSC<\/td>\nGS Connect S&P; GSCI Enh Commodity ETN<\/td>\nThe Goldman Sachs Group, Inc.<\/td>\n<\/tr>\n
GSP<\/td>\niPath S&P; GSCI Total Return Index ETN<\/td>\nBarclays Bank, PLC.<\/td>\n<\/tr>\n
GWO<\/td>\nElements CS Global Warming ETN<\/td>\nCredit Suisse<\/td>\n<\/tr>\n
ICI<\/td>\niPath Optimized Currency Carry ETN<\/td>\nBarclays Bank, PLC.<\/td>\n<\/tr>\n
INP<\/td>\niPath MSCI India Index ETN<\/td>\nBarclays Bank, PLC.<\/td>\n<\/tr>\n
INR<\/td>\nMarket Vectors Indian Rupee\/USD ETN<\/td>\nMorgan Stanley<\/td>\n<\/tr>\n
JEM<\/td>\nBarclays GEMS Currency Index ETN<\/td>\nBarclays Bank, PLC.<\/td>\n<\/tr>\n
JFT<\/td>\nFirst Trust Enhanced 130\/30 Large Cap ETN<\/td>\nJPMorgan Chase & Co.<\/td>\n<\/tr>\n
JJA<\/td>\niPath DJ AIG Agriculture ETN<\/td>\nBarclays Bank, PLC.<\/td>\n<\/tr>\n
JJC<\/td>\niPath DJ AIG Copper ETN<\/td>\nBarclays Bank, PLC.<\/td>\n<\/tr>\n
JJE<\/td>\niPath DJ AIG Energy ETN<\/td>\nBarclays Bank, PLC.<\/td>\n<\/tr>\n
JJG<\/td>\niPath DJ AIG Grains ETN<\/td>\nBarclays Bank, PLC.<\/td>\n<\/tr>\n
JJM<\/td>\niPath DJ AIG Industrial Metals ETN<\/td>\nBarclays Bank, PLC.<\/td>\n<\/tr>\n
JJN<\/td>\niPath DJ AIG Nickel ETN<\/td>\nBarclays Bank, PLC.<\/td>\n<\/tr>\n
JJP<\/td>\niPath DJ AIG Precious Metals ETN<\/td>\nBarclays Bank, PLC.<\/td>\n<\/tr>\n
JJS<\/td>\niPath DJ AIG Softs ETN<\/td>\nBarclays Bank, PLC.<\/td>\n<\/tr>\n
JJT<\/td>\niPath DJ AIG Tin ETN<\/td>\nBarclays Bank, PLC.<\/td>\n<\/tr>\n
JJU<\/td>\niPath DJ AIG Aluminum ETN<\/td>\nBarclays Bank, PLC.<\/td>\n<\/tr>\n
JO<\/td>\niPath DJ AIG Coffee ETN<\/td>\nBarclays Bank, PLC.<\/td>\n<\/tr>\n
JYN<\/td>\niPath JPY\/USD Exchange Rate ETN<\/td>\nBarclays Bank, PLC.<\/td>\n<\/tr>\n
LD<\/td>\niPath DJ AIG Lead ETN<\/td>\nBarclays Bank, PLC.<\/td>\n<\/tr>\n
LSC<\/td>\nElements S&P; Commodity Trends Idr ETN<\/td>\nHSBC USA Inc.<\/td>\n<\/tr>\n
LSO<\/td>\nElements MLCX Livestock ETN<\/td>\nCredit Suisse<\/td>\n<\/tr>\n
NIB<\/td>\niPath DJ AIG Cocoa ETN<\/td>\nBarclays Bank, PLC.<\/td>\n<\/tr>\n
OIL<\/td>\niPath S&P; GSCI Crude Oil Total Return ETN<\/td>\nBarclays Bank, PLC.<\/td>\n<\/tr>\n
OLO<\/td>\nPowerShares DB Crude Oil Long ETN<\/td>\nDeutsche Bank AG, London Branch<\/td>\n<\/tr>\n
PGD<\/td>\nBarclays Asian&Gulf; Currency Reval. ETN<\/td>\nBarclays Bank, PLC.<\/td>\n<\/tr>\n
PGM<\/td>\niPath DJ Platinum ETN<\/td>\nBarclays Bank, PLC.<\/td>\n<\/tr>\n
PMY<\/td>\nElements MLCX Precious Metals ETN<\/td>\nCredit Suisse<\/td>\n<\/tr>\n
PTD<\/td>\nE-TRACS CMCI Short Platinum Exc Ret ETN<\/td>\nUBS AG<\/td>\n<\/tr>\n
PTM<\/td>\nE-TRACS CMCI Long Platinum TR ETN<\/td>\nUBS AG<\/td>\n<\/tr>\n
RJA<\/td>\nElements Rogers Agriculture ETN<\/td>\nSwedish Export Credit Corp.<\/td>\n<\/tr>\n
RJI<\/td>\nElements Rogers Commodity TotRet ETN<\/td>\nSwedish Export Credit Corp.<\/td>\n<\/tr>\n
RJN<\/td>\nElements Rogers Energy ETN<\/td>\nSwedish Export Credit Corp.<\/td>\n<\/tr>\n
RJZ<\/td>\nElements Rogers Metals ETN<\/td>\nSwedish Export Credit Corp.<\/td>\n<\/tr>\n
SGG<\/td>\niPath DJ AIG Sugar ETN<\/td>\nBarclays Bank, PLC.<\/td>\n<\/tr>\n
SZO<\/td>\nPowerShares DB Crude Oil Short ETN<\/td>\nDeutsche Bank AG, London Branch<\/td>\n<\/tr>\n
UAG<\/td>\nE-TRACS CMCI Agriculture TR ETN<\/td>\nUBS AG<\/td>\n<\/tr>\n
UBC<\/td>\nE-TRACS CMCI Livestock Total Return ETN<\/td>\nUBS AG<\/td>\n<\/tr>\n
UBG<\/td>\nE-TRACS CMCI Gold Total Return ETN<\/td>\nUBS AG<\/td>\n<\/tr>\n
UBM<\/td>\nE-TRACS CMCI Industrial Metals TR ETN<\/td>\nUBS AG<\/td>\n<\/tr>\n
UBN<\/td>\nE-TRACS CMCI Energy Total Return ETN<\/td>\nUBS AG<\/td>\n<\/tr>\n
UCI<\/td>\nE-TRACS CMCI Total Return ETN<\/td>\nUBS AG<\/td>\n<\/tr>\n
URR<\/td>\nMarket Vectors Double Long Euro ETN<\/td>\nMorgan Stanley<\/td>\n<\/tr>\n
USV<\/td>\nE-TRACS CMCI Silver Total Return ETN<\/td>\nUBS AG<\/td>\n<\/tr>\n
WMW<\/td>\nElements Morningstar Wide Moat Focus ETN<\/td>\nDeutsche Bank AG<\/td>\n<\/tr>\n
<\/td>\n\u00a9 Copyright 2009, AllStarInvestor.com<\/td>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Note:<\/em>\u00a0BearLinx Alerian MLP Select ETN (BSR) is an unsecured note originally issued by Bear Stearns.\u00a0 Presumably, this note was assumed by J.P. Morgan\u00a0Chase as part of their acquisition of Bear Stearns, however we were unable to verify.<\/p>\n

U.S. ETN CLOSURES AS OF JAN. 27, 2009<\/h2>\n\n\n\n\n\n\n\n\n\n\n\n\n\n
Ticker<\/th>\nName<\/th>\nDisposition<\/th>\n<\/tr>\n<\/thead>\n
EOH<\/td>\nOpta Lehman Agriculture Pure Beta ETN<\/td>\nVictim of 9\/12\/08 Lehman Bankruptcy<\/td>\n<\/tr>\n
PPE<\/td>\nOpta S&P; Private Equity Notes 2038 ETN<\/td>\nVictim of 9\/12\/08 Lehman Bankruptcy<\/td>\n<\/tr>\n
RAW<\/td>\nOpta Lehman Commodity Index ETN<\/td>\nVictim of 9\/12\/08 Lehman Bankruptcy<\/td>\n<\/tr>\n
ADE<\/td>\nElements Australian Dollar AUD\/USD ETN<\/td>\nClosed 11\/17\/09 w\/ orderly liquidation<\/td>\n<\/tr>\n
CUD<\/td>\nElements Canadian Dollar CAD\/USD ETN<\/td>\nClosed 11\/17\/09 w\/ orderly liquidation<\/td>\n<\/tr>\n
EGB<\/td>\nElements British Pound GBP\/USD ETN<\/td>\nClosed 11\/17\/09 w\/ orderly liquidation<\/td>\n<\/tr>\n
ERE<\/td>\nElements Euro EUR\/USD ETN<\/td>\nClosed 11\/17\/09 w\/ orderly liquidation<\/td>\n<\/tr>\n
SZE<\/td>\nElements Swiss Franc CHF\/USD ETN<\/td>\nClosed 11\/17\/09 w\/ orderly liquidation<\/td>\n<\/tr>\n
<\/td>\n\u00a9 Copyright 2009 AllStarInvestor.com<\/td>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

 <\/p>\n

Disclosure:\u00a0 Long some of the listed securities.<\/p>\n","protected":false},"excerpt":{"rendered":"

Are all of your ETF holdings truly exchange-traded funds? \u00a0Or, are some of them exchange-traded\u00a0notes,\u00a0otherwise known as\u00a0ETNs?\u00a0 Chances are, you might not even know.\u00a0 However, this knowledge is crucial if you want to get a handle on the risks associated with your holdings. ETNs\u00a0are unsecured debt securities – bonds.\u00a0 Even if your ETN is tracking …<\/p>\n","protected":false},"author":4,"featured_media":0,"parent":0,"menu_order":0,"comment_status":"closed","ping_status":"closed","template":"","meta":{"_genesis_hide_title":false,"_genesis_hide_breadcrumbs":false,"_genesis_hide_singular_image":false,"_genesis_hide_footer_widgets":false,"_genesis_custom_body_class":"","_genesis_custom_post_class":"","_genesis_layout":"","footnotes":""},"acf":[],"_links":{"self":[{"href":"https:\/\/investwithanedge.com\/wp-json\/wp\/v2\/pages\/660"}],"collection":[{"href":"https:\/\/investwithanedge.com\/wp-json\/wp\/v2\/pages"}],"about":[{"href":"https:\/\/investwithanedge.com\/wp-json\/wp\/v2\/types\/page"}],"author":[{"embeddable":true,"href":"https:\/\/investwithanedge.com\/wp-json\/wp\/v2\/users\/4"}],"replies":[{"embeddable":true,"href":"https:\/\/investwithanedge.com\/wp-json\/wp\/v2\/comments?post=660"}],"version-history":[{"count":0,"href":"https:\/\/investwithanedge.com\/wp-json\/wp\/v2\/pages\/660\/revisions"}],"wp:attachment":[{"href":"https:\/\/investwithanedge.com\/wp-json\/wp\/v2\/media?parent=660"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}