Exchange Traded Note (ETN) Definition

Dec 04, 2023

Reviewed by: etf.com Staff

Edited by: etf.com Staff

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.

ETF Glossary

ETF Glossary is etf.com’s collection of key terms and definitions related to exchange-traded funds. ETFs are investment funds that are traded on stock exchanges, and they can encompass a wide range of asset classes, including stocks, bonds, commodities and more. Given the diverse range of ETFs and the complexity of financial markets, having a clear understanding of ETF-related terminology is instrumental for investors looking to make informed decisions, manage risks effectively and navigate the evolving landscape of ETF investments.

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