iPath ETN Lineup To See Dramatic Revamp

January 16, 2018

Difference In Structure

Further, the new ETNs will be callable, meaning Barclays can redeem them from investors when it sees the need to do so. When an ETN isn’t callable, if something goes wrong before it reaches its maturity, the issuer has very little recourse in terms of pulling the product off the market. This issue came into focus with GAZ, a very popular ETN that basically turned into a zombie fund when its creations were halted several years ago. Creations never restarted, and the product barely traded for nearly a decade, languishing in a weird sort of ETN limbo.

The problem was that it had no “call” feature and Barclays had no way to pull it off the market until the NYSE Arca deemed the ETN no longer suitable for listing on its exchange due to its low share price. The issuer launched GAZB as a replacement product last year, and the new product is callable.

Similar to GAZ, OIL has already had a replacement launched, the iPath Series B S&P GSCI Crude Oil ETN (OILB), which launched back in 2016.

Investors who hold the existing ETNs have a number of choices of what to do.

Options For Shareholders

Of course they can trade shares on the secondary market prior to the delisting, and after they can trade them over-the-counter (OTC), though liquidity and pricing (given that creations will be shut down) could be rather touch-and-go.

Another option is to put the ETNs back to Barclays, which has done away with the minimum redemption size—typically 20,000 to 50,000 shares, an amount that would be manageable only for institutional investors—for these ETNs and all of the others that will be closed or delisted as part of the changes to the iPath lineup. Investors simply need to find a broker to conduct the transaction. They can also choose between receiving cash in return for their ETNs or simultaneously receiving a corresponding amount of the new Series B ETNs tracking the same indexes as the ETNs they are putting back to Barclays.

Delistings & Redemptions

Beyond the previously mentioned products, another 34 ETNs, most of which have not gathered significant assets, will be either delisted or subject to redemption. The 16 ETNs that are delisting are as follows:

 

ETN Ticker
iPath MSCI India Index ETN INP
iPath Asian and Gulf Currency Revaluation ETN PGD
iPath CBOE S&P 500 BuyWrite Index ETN BWV
iPath EUR/USD Exchange Rate ETN ERO
iPath GBP/USD Exchange Rate ETN GBB
iPath GEMS Asia 8 ETN AYT
iPath GEMS Index ETN JEM
iPath Global Carbon ETN GRN
iPath Inverse S&P 500 VIX Short-Term Futures ETN XXV
iPath JPY/USD Exchange Rate ETN JYN
iPath Long Enhanced MSCI EAFE Index ETN MFLA
iPath Long Enhanced MSCI EM Index ETN EMLB
iPath Long Extended Russell 1000 TR Index ETN ROLA
iPath Long Extended Russell 2000 TR Index ETN RTLA
iPath Long Extended S&P 500 TR Index ETN SFLA
iPath Optimized Currency Carry ETN ICI

 

Following their delisting, the funds can be traded on the OTC market, but liquidity and pricing can become issues, as mentioned earlier. 

The 18 ETNs that will be redeemed are in the below table:

 

ETNs To Be Redeemed

ETN Ticker
iPath Pure Beta Agriculture ETN DIRT
iPath Pure Beta Aluminum ETN FOIL
iPath Pure Beta Cocoa ETN CHOC
iPath Pure Beta Coffee ETN CAFE
iPath Pure Beta Copper ETN CUPM
iPath Pure Beta Cotton ETN CTNN
iPath Pure Beta Energy ETN ONG
iPath Pure Beta Grains ETN WEET
iPath Pure Beta Industrial Metals ETN HEVY
iPath Pure Beta Lead ETN LEDD
iPath Pure Beta Livestock ETN LSTK
iPath Pure Beta Nickel ETN NINI
iPath Pure Beta Precious Metals ETN BLNG
iPath Pure Beta Softs ETN GRWN
iPath Pure Beta Sugar ETN SGAR
iPath Pure Beta S&P GSCI-Weighted ETN SBV
iPath Seasonal Natural Gas ETN DCNG
iPath Inverse S&P 500 VIX Short-Term Futures ETN (II) IVOP

 

These ETNs do have a call feature, and their prospectuses indicate they can be redeemed by Barclays at the firm’s discretion. The redemption date is set for April 12, but shareholders will receive cash payments equal to the product’s closing indicative value as of April 5.

That said, the ETNs’ holders can also redeem the ETNs themselves, and again Barclays has waived the minimum redemption size for all of the ETNs being closed or delisted.

The press release notes that investors need not take any action regarding these changes if they so choose, but again, investors who do so will be stuck trying to unwind their investment in the OTC market.

Just to give you an idea of how wide-reaching the changes are, Barclays has a total of 72 products trading under its iPath brand and another nine trading under the Barclays brand.

Contact Heather Bell at [email protected]

Find your next ETF

Reset All