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Exchange-Traded Notes (ETNs) allow you to gain exposure to the performance of an underlying index or asset class. They are debt securities issued by a financial institution (the issuer), which you can trade through your investment account.

ETNs can provide exposure to markets or asset classes that may be difficult to invest in directly, helping to diversify a portfolio by offering exposure to assets that may behave differently from other investments, without holding the underlying assets directly.

ETNs are unsecured, meaning that repayment of principal and any potential returns depends on the creditworthiness of the issuer and is not backed by collateral. You should be aware of these risks before investing.

While some ETNs and ETFs may aim to track the same index or group of assets, they are fundamentally different instruments. ETNs are debt securities issued by a financial institution, not funds that hold assets.

When you invest in an ETN, you are lending money to the issuer which means you are exposed to the issuer’s credit risk. If the issuer cannot meet its obligations, you may lose some or all of your investment, even if the underlying asset performs well.

Some ETNs may be leveraged and/or inverse and carry higher risk. Read more about these in this FAQ.

ETNs typically don’t pay out dividends.

ETNs prices may not always correlate precisely with the underlying index, particularly during times of market stress or issuer-specific credit events (tracking error)

Leveraged and inverse ETNs rebalance their exposure daily, which introduces compounding risk and can cause their returns over longer periods to differ significantly from the target multiple of the underlying index, making them ill-suited for a buy-and-hold strategy.