Exchange Traded Note (ETN) Definition
Learn the definition of exchange traded note (etn) and other ETF terminology from the etf.com glossary.
Learn more about Exchange Traded Notes (ETN)
An exchange-traded note, or ETN, is a debt security that tracks the performance of an underlying asset, such as a stock, index, or commodity. ETNs trade on exchanges like stocks, but they are not backed by the underlying assets of the issuer. Instead, they represent a promise by the issuer to pay investors the performance of the underlying asset, minus any fees. ETNs are similar to exchange-traded funds, or ETFs, in that they both track underlying assets and trade on exchanges. However, there are some key differences between ETNs and ETFs. First, ETFs are backed by the underlying assets of the issuer, while ETNs are not. Second, ETFs are typically structured as open-ended funds, while ETNs are typically structured as closed-end funds. Finally, ETFs are generally more transparent than ETNs. ETNs can be a useful tool for investors who want to gain exposure to a particular asset without having to buy the underlying asset itself.
Related Terms
ETF Issuer, Exchange Traded Fund (ETF), Open-End Fund, Closed-End Fund
