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Casey Smith's  Instablog

Casey earned a bachelor's of science degree with a major in finance from Berry College in Rome, Georgia and earned his Series 7 and 66 while employed with AXA Advisor's in Atlanta. Unhappy with the brokerage product pushing agenda, Casey became a registered investment advisor and formed CT Smith... More
My business:
Wiser Wealth Management, Inc
My blog:
Wiser Wealth Management Blog
  • ETNs, Your Better Be Careful

    We hear a lot today about ETFs. ETFs are certainly great products that reduce company risk and allow for superior diversification. I want to discuss the ETF’s Cousin, Exchange Traded Notes. Both ETFs and ETNs track an assigned index, trade like a stock and are very liquid. The similarities stop here.

    ETFs are structured such that the shareholder owns a basket of securities. Should the ETF provider go bankrupt or shutdown the ETF, the shareholder will usually receive cash for the market value of the basket of securities. If you own more than 50,000 shares, then you could request to take distribution of the securities.

    ETNs are debt instruments. Debt instruments do not own anything but a promise to track an index. The largest ETN based on assets is Barclay’s iPath Dow Jones Commodity Index (NYSE: DJP). From iPath’s website we see DJP’s largest holdings are 30% energy, 21% grains, 19% industrial metals, 12% precious metals, 2% livestock and 16% other.

    More »
    Tags: DXO, DJP, OIL, ETN
    Apr 09 08:58 am | Link | Comment!
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