Market watchers may have noticed that there were some rumblings in Barclays’ lineup of iPath exchange-traded notes over the past year.
The iPath Bloomberg Natural Gas Subindex Total Return ETN (GAZ) was finally delisted after having its creations frozen for nearly a decade with a replacement ETN offered. Also, a pair of the issuer’s largest VIX ETNs are set to see replacements hit the market soon—roughly a year before the corresponding original versions reach maturity.
In retrospect, these things were all warning signs of a major shakeup in the form of two major announcements last week.
Not only is iPath delisting or redeeming a total of 50 of its ETNs, effective April 12, it’s also launching 15 replacements for its original commodity iPath ETNs—a “B Series” that is sort of a new and improved take on what were among the very first ETNs.
16 Commodity ETN Launches
The “Series B” commodity ETNs are essentially one-for-one replacements for the delisting iPath commodity ETNs. The new products, which are set to launch Jan. 18, are listed in the following table:
The ETNs they are replacing (which will be delisted by Barclays) are some of the earliest ETNs, and launched nearly a decade ago (see table below). The Series B products have some key differences relative to their original versions.
Perhaps most importantly for investors, they have significantly lower fees. The new products will come with a daily investor fee of 0.45%—the older set of ETNs all come with an expense ratio of 0.75%. The fee will also be charged differently, using a daily basis based on the closing indicative value of the ETN.
Prior to 2009, there was no accepted standard for how fees were charged. They could be leveled on a daily basis, on a monthly basis or a quarterly basis, etc. Charging the investor fee on a daily basis is more consistent and predictable for investors; it’s also more similar to how ETFs charge their fees, and is in line with how ETNs launched from 2009 onward have calculated their fees.
UBS similarly launched its own "Series B" ETNs in 2015 and 2016. The largest is the ETRACS 2xMonthly Leveraged S&P MLP Index ETN Series B (MLPZ), with $61.5 million in assets under management. It replaced a similarly named ETN that traded under the ticker MLPV and closed down in 2016.
