Don’t own ETNs in this panic period
ETNs (exchange traded notes) are bonds. They are not funds. They are are subject to the general creditors of the issuer (typically a bank). If the bank fails, your ETN assets will stand in line with other bond holders in the liquidation or bankruptcy process.
ETNs are an interesting product with important uses, in prudent doses, in good times. In this difficult period, their are very high risk.
Don’t own ETNs for now.
Read our September 15 “ETN Caution” article for more information about the bank issuers of ETNs. The capital position of most and perhaps all of the issuing banks have most likely deteriorated since that article was written.
Richard Shaw
QVM Group LLC