Investment Management Partner Quoted in Energy Risk on Characteristics of Exchange-Traded Notes

An article published on May 12 by Energy Risk outlines how in several recent cases, banks have halted creations of exchange-traded notes (ETNs) linked to commodity prices. Critics of these securities state they are less robust than exchange-traded funds (ETFs) or other exchange-traded products (ETPs), which unlike ETNs hold actual assets. The article reviews the characteristics of ETNs in comparison to other investment products. In the piece, investment management partner Brian McCabe (Boston) outlines that "From an investment standpoint, one of the distinguishing characteristics of an ETN is that the holder of an ETN is exposed to the credit of the issuing bank," and also notes that these may be “more efficient from the standpoint of US income taxation, as ETNs are not required to pay interest or dividends."