It seems unbelievable that the first exchange traded notes (ETNs) were launched by Barclays just over a year ago in June: iPath S&P GSCI Total Return Index ETN (GSP) and iPath Dow Jones AIG Commodity Index (DJP). Since Barclays’ start in commodities, it has spread its ETNs into currencies and regions. It wasn’t until earlier this month that Goldman Sachs became the second provider to launch its own ETNs. Some say Goldman Sachs’ entry into the ETN game could really heat up competition.

ETNs are similar to ETFs in that investors can buy or sell them throughout the day, they charge fees and their performance typically tracks an index. However, ETNs are different from ETFs in that investors who have them don’t actually own anything. When investors buy ETNs, the underwriting bank promises to pay investors the amount reflected in the index it tracks, minus fees.

Tags: Commodity ETFs, ETNs