Barclays launched a new investment vehicle today, Exchange Traded Notes (ETNs). Referred to as iPath ETNs, they are unsecured, unsubordinated, debt securities issued by Barclays Bank. They claim to give immediate exposure to certain asset classes that have not always been easy to access, such as commodities.
Two ETNs began trading today, iPath GSCI Total Return Index (GSP) and iPath Dow Jones AIG Commodity Index Total Return (DJP).
iPath ETNs are traded daily on the New York Stock Exchange. They can be redeemed on a weekly basis to Barclays or they can be held until maturity (the term is 30 years).
How are they different from ETFs?
Instead of a portfolio of securities they are issuer credit and the principal risk is not only in the market but with the issuer (Barclays); can be redeemed weekly to the issuer, whereas ETFs can be redeemed daily through a custodian.
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