“It would require a really well-thought-out distribution strategy because you’re getting into the asset management game,” one head of sales at a major issuer said in the article. “To launch something and hope people will come to it – that’s not going to happen every day.”
While some ETNs were launched into a wide distribution network where anyone can buy them, most underwriting banks have partners or investors already lined up. For instance, the Barclays ETN+ Select MLP ETN (NYSEArca: ATMP) was launched by Barclays together with asset manager Atlantic Trust. ATMP has gathered $293.2 million in assets in a year. [New Barclays MLP ETN Pays Nearly 6% Yield]
“We brought the idea to Barclays, and they helped us refine it,” Atlantic Trust’s managing director Adam Karpf said in the article.
Moreover, brokers and many advisors have kept ETN picks away from the retail side. They don’t necessarily prohibit clients from using ETNs but rather not recommend them, according to a New York-based in-house lawyer.
For more information on exchange traded notes, visit our ETNs category.
Max Chen contributed to this article.