An Account On Exchange Traded notes

Exchange Traded Notes, traded fundThe latest buzz of the Wall Street is this Exchange Traded Notes seems is quite similar with Exchange Traded Fund. Likewise they track a index and gets traded through the day in the stock exchange, but certainly there are differences. The Exchange Traded Notes are to be simple unsecured promissory obligation which is issued with the guarantee of a financial institution. To put together it is an investment in promise other than just a debt with loads of assets secured. The debtor agrees to pay the investor with the line of the index’s performance without the tracking error. Thus a counter-party risk hangs over the Exchange Traded Notes. On the other hand the Exchange Traded Notes attracts derivatives and comes with fixed maturity date. They also seem to come with tax benefits and more or less the returns are market performance based.

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