ETNs look safe. Investors can bite.

Exchange-traded banknotes are sheep dressed as sheep. Although they may seem like a close relative of well-known exchange-traded funds, they are very different beasts. Most retail investors should be clear.

The British bank Barclays recently said it would get nearly $ 600 million in ETNs as a result of an administrative error, but more often these products are linked to losses for investors than for the banks that issue them. Nearly half of the $ 26 billion invested by U.S. ETNs since 2006 has been burned, according to low estimates by Ben Johnson, director of global ETF research at Morningstar data provider. Issuers say these calculations are misleading, as most ETNs are used tactically by savvy investors to make short-term hedges or bets. In any case, the asset class is expensive, dangerous, and complex.

ETNs look safe. Investors can bite.

Source link ETNs look safe. Investors can bite.

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