How Are They different?
In practice, the two are very similar. Both are designed to track an underlying asset, both often have lower expense ratios than actively managed mutual funds, and both trade on the major exchanges just like stock.
The main difference is under the hood. When you invest in an ETF, you are investing into a fund that holds the asset it tracks. That asset may be stocks, bonds, gold or other commodities, or futures contracts.
An ETN is more like a bond. It's an unsecured debt note issued by an institution. Just like with a bond, an ETN can be held to maturity, bought or sold at will, and if the underwriter(usually a bank) were to go bankrupt, the investor would risk a total default
In practice, the two are very similar. Both are designed to track an underlying asset, both often have lower expense ratios than actively managed mutual funds, and both trade on the major exchanges just like stock.
The main difference is under the hood. When you invest in an ETF, you are investing into a fund that holds the asset it tracks. That asset may be stocks, bonds, gold or other commodities, or futures contracts.
An ETN is more like a bond. It's an unsecured debt note issued by an institution. Just like with a bond, an ETN can be held to maturity, bought or sold at will, and if the underwriter(usually a bank) were to go bankrupt, the investor would risk a total default
