Wednesday, December 29, 2010

ETN

An ETN or Exchange Traded Note is an unsecured debt security that pays a return linked to the performance of an index or single security and is traded on an exchange. ETNs don't tend to pay interest or dividends, and have extremely long dated maturities e.g. 30 years. An ETN that is held to maturity will pay the holder the promised return e.g. of the S&P 500 index, less expenses. Because ETNs are typically put together with derivatives, including over the counter, bespoke derivatives, counterparty risk will usually arise, which may impact on the value and final return of the ETN.

Synonyms: Exchange Traded Note, Exchange traded product

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