5 Top ETN Investments and How They Differ from ETF Funds

Dealing in debt instead of assets, ETNs have their own quirks

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5 Top ETN Investments and How They Differ from ETF Funds

iShares Dow Jones US Financial Sector (IYF)

Just a couple years, it looked like the financial system was about to implode. But with a huge federal bailout, there has been a turnaround. And it may still be in the early stages, especially as the U.S. economy comes back.

One ETN that taps into this trend is the iShares Dow Jones US Financial Sector (NYSE: IYF). It tracks an index of over 250 financial services firms, which span categories like banking, insurance and mortgages.

For the most part, the Financial Sector ETN focuses on high-quality issues. The top holdings include JP Morgan Chase (NYSE: JPM), Wells Fargo Company (NYSE: WFC),  Bank of America (NYSE: BAC), Citigroup (NYSE: C) and Berkshire Hathaway (NYSE: BRK.A, BRK.B).

iPath MSCI India Index ETN (INP)

Since moving away from socialism in the early 1990s, India has been a strong growth story. While the it is no longer in the double-digits, it is still impressive. Keep in mind that the economy grew 7.4% during 2008, when there was a global recession.

To participate in the growth, there is the iPath MSCI India Index ETN (NYSE: INP), which has $798 million in assets. It is based on the MSCI India Total Return Index (composed of 60 companies). The industry categories range from financials, information technology and energy.

iPath DJ-UBS Commodity Index TR ETN (DJP)

If you take a look at a list of ETNs, you’ll notice that many are focused on commodity markets. Then again, an ETN structure is a good choice for investments that are based on futures contracts.

The largest commodity-based ETN is the iPath Dow Jones-UBS Commodity Index TR ETN (NYSE: DJP). It has $3.2 billion in assets.

All in all, the Dow-Jones-UBS ETN is a good way to get exposure to commodities, since it has positions in 19 categories. Some include energy, agriculture, precious metals, livestock and so on.

iPath S&P 500 VIX Short-Term Futures ETN (VXX)

There seems to be no end to market volatility. Of course, the latest events involve things like radiation disasters as well as instability in the Middle East.

But interestingly enough, there is an index that increases in value when there is volatility. It’s called the VIX index, which is based on the swings in the S&P 500 (another name for it is the “fear index”).

And yes, there is an ETN for the VIX: the iPath S&P 500 VIX Short-Term Futures ETN (NYSE: VXX). Now doubt, the VIX was one of the best-performing investments in 2008, hitting a record of 80.


Article printed from InvestorPlace Media, http://investorplace.com/2011/03/etn-etf-exchange-traded-note-ipath-commodity/.

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