The beauty of Barclays Bank’s exchange-traded note [ETN] product structure is that it can be applied to … anything. Because the notes are debt instruments backed by Barclays, and not equity instruments that hold actual securities, they can be applied to any asset, so long as Barclays is willing to take on the risk.
So far, Barclays has focused the notes on the commodities space, with the launch of three commodity-based ETNs. But things will get much more interesting on December 20, when the company launches its fourth ETN, the iPath MSCI India Index ETN, tied to domestically listed India stocks. The fund will list on the New York Stock Exchange, and trade under the ticker symbol “INP.”
The underlying MSCI index tracks 68 of the largest companies in the domestic Indian market, representing over 85 percent of the total market cap of the country's borse. Indian markets have been hands-off for U.S. investors, thanks to restrictions on foreign ownership; currently, there are only two U.S. mutual funds focused on the country, and both are extremely expensive: the Eaton Vance Greater India Fund hits investors with a 2.15-2.65 percent annual expense ratio, while the Matthews India Fund tallies up at an even 2 percent. By contrast, the new ETN will charge just 75 basis points.
Claymore Securities has also filed for an India exchange-traded fund, but rather than holding domestically-listed India assets, it will focus on American Depository Receipts.