ETN
Exchange-Traded Note. An unsecured debt obligation issued by a bank that promises to pay the return of a reference index (commonly a volatility, commodity, or currency index) minus fees. Unlike an ETF, an ETN does not hold the underlying assets — it is a contractual IOU from the issuer, so investors bear the issuer's credit risk. ETNs can also be liquidated or "accelerated" by the issuer under terms in the prospectus; Credit Suisse's XIV (an inverse VIX ETN) was famously terminated after a ~95% one-day loss in February 2018. Read the prospectus before buying any ETN — the issuer can shut it down.
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Related terms
Ambiguity Aversion · Anchored Assumption · Asset Beta · Bank ROE Spread · Banker Pitch Deck · Beta
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