Tracking. Since the issuer promises to pay the return of the underlying index, minus fees, ETNs typically do not experience wide tracking errors.
However, ETNs can show large premiums or discounts to its NAV if the sponsor decides to limit of new share issuance.
Transparency. The net asset values are published and updated on 15 second intervals throughout normal trading hours.
Liquidity. As ETNs are listed on an exchange, investors can sell ETNs in the secondary market at market price during normal hours, hold the debt security to maturity or allow the issuer to redeem the ETN.
For more information on exchange traded notes, visit our ETNs category.
Max Chen contributed to this article.