May 01, 2008 at 1:00 am by Tom Lydon
The exchange traded note (ETN) has been carving its own niche within the investment community and launches of them so far for 2008 have been outpacing those of exchange traded funds (ETFs).
Barclays managing director and head of investor solutions, Phillipe El-Asmar, revealed certain points on the creation of the iPath family. On Seeking Alpha, he speaks with Heather Bell of Index Universe.
El-Asmar says they created the iPath family of ETNs as a compliment to the iShares series of ETFs, which would facilitate access for hard-to-reach asset classes.
Most plans are discussed three to six months in advance, sometimes more, and decisions are based upon client needs and investor feedback. Whether an ETF or ETN is created depends on the gaps needing to be filled. Sometimes an ETF and an ETF that track the same underlying index will be created. The ETN will provide the means to access hard-to-reach areas, while ETFs provide the more traditional exposure.
As the ETN offerings expand, El-Asmar says the primary consideration is what the clients want and providing them with choices, rather than a "see what sticks" approach.
Barclays anticipates heavy growth in the ETN area. The first note launched in June 2006. Less than two years later, there are 58 ETNs and nearly $6.2 billion in assets.
