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ETN Holders: Do You Know To Whom You Are Lending?

Exchange Traded Funds (“ETFs”) and Exchange Traded Notes (“ETNs”) are similar in some ways but have major differences as well.  When you buy an ETF, you receive an ownership stake in a pooled investment, structured as an independent entity.  When you buy an ETN, you are essentially lending your money to the issuer.  All you own is an IOU, and the identity of “I” and “U” may not be entirely clear. The key feature making ETFs and ETNs similar is their ability to create and redeem shares via in-kind or cash exchanges.  This ongoing process is the essence of the ETF/ETN structure.  In addition to providing liquidity and tax efficiency, it keeps trading prices aligned with net-asset-values, avoiding (or . . . → Read More: ETN Holders: Do You Know To Whom You Are Lending?
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