JP Morgan warned the cap for AMJ may result in the shares value deviating from net asset value.
“It is possible that the maximum issuance authorization … may influence the market value of the ETNs,” JP Morgan said in the press release. “Due to market supply and demand, the price of the ETNs may trade at a premium above their indicative note value. Any ETN price premium may subsequently decrease resulting in financial loss to sellers who paid this price premium. ETN investors should always consult their financial advisors before purchasing or selling ETNs, especially ETNs with premium characteristics.”
The iPath Dow Jones-UBS Natural Gas ETN (NYSEArca: GAZ) is another example of an exchange traded product that is trading at a premium. Barclays, the issuer for GAZ, suspended new share issuance in 2009. GAZ was recently trading at a premium of more than 50% to indicative value. [ETFs for a Natural Gas Rebound]
JPMorgan Alerian MLP Index ETN
