After taking a hit after the financial crisis it seems like the ETN, or exchange traded note, has once again becoming popular. Issuers, especially in the VIX and MLP space, seem to prefer it over ETFs. The simple fact that while ETNs and ETFs appear to be interchangeable they are in fact two very different structures. Any one investing in ETNs should be aware that they are buying a debt instrument, as opposed to a fund. While the likelihood of bankruptcy of an ETF issuer seems more remote than it did during the height of the financial crisis, the risks are not zero. In today’s screencast we take a look at the new ETNs planned for the VIX space and note hte differences between the two structures.
Items mentioned in the above screencast:
A role reversal for the $VXX. (AR Screencast)
ETNs: riskier than they look. (Invest With An Edge)
ETFs and ETNs: A Cautionary Tale. (Schwab)
Basics of ETN investing. (ETFdb)
MLP ETFs: facts and fiction. (ETFdb)
Update: Bill Luby reminds me that ProShares has filed for two VIX-related ETFs (see IndexUniverse).