Are exchange traded notes (ETNs) the new exchange traded fund (ETF)?

Lauren Young for Business Week points out that new ETF issues are down so far this year, but filings for ETNs are gathering steam. They’ve accounted for about one in every two launches in 2008.

At the end of December 2006, there were 359 ETFs. By February 2007, that number had grown to 432. Compare that with December 2007, when there were 629 ETFs. At the end of February, the total sat at 634.

But ETNs are moving and growing.

Jeffry Ptak for Morningstar does not think it’s a good development, as most of the ETNs are currency or commodities-focused. From the amount of activity going on in the commodities sector, the apex may have been seen already.

While it’s true that many of these funds focus on commodities and currencies, we maintain that it’s up to the investor to decide if these new products are right for them. No ETF is one-size-fits-all, and as with any other kind of product, caveat emptor.

Some of the new listed ETNs so far this year include:

  • DB Agriculture Double Short (AGA)
  • DB Agriculture Double Long (DAG)
  • DB Agriculture Short (ADZ)
  • DB Agriculture Long (AGF)
  • MLCX Grains Index ETN (GRU)
  • E-TRACS UBS Bloomberg CMCI Food Index ETN (FUD)
  • Market Vectors Indian Rupee (INR)
  • Market Vectors Chinese Renminbi (CNY)
  • DB Gold Double Short (DZZ)
  • DB Gold Double Long (DGP)
  • DB Gold Short (DGZ)

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.