There’s no secret that I love exchange-traded funds. The portable and cheap basket of stocks, bonds and other assets are some of the best ways investors can build portfolios.

But an ETF isn’t always an option to package certain strategies, and that’s where exchange-traded notes — which actually are a type of debt security that can be used to mimic the returns of an index — come in.

But these ETNs have several issues, not the least of which is that they can be used for “gimmicky” products — with the new Barclays Women in Leadership ETN (WIL) being the latest. These deals can be great for issuing firms, sure … just not so much for investors.

So before you celebrate WIL as an advance in gender equity, you might want to look at it more carefully.

The New Barclays Women in Leadership ETN (WIL)

After years of underperformance, socially responsible investing (SRI) has finally begun moving in the right direction on the return front, and some of these funds that use various environmental, social and governance screens are even beating the market. In some cases, by a lot.

That fact hasn’t been lost on Wall Street marketers, who have started taking two major social issues – LGBT rights and gender equality — and turning them into SRI-styled funds.

We’ve already seen the launch of ALPS Workplace Equality ETF (EQLT) and the Sallie Krawcheck-backed Pax Ellevate Global Women’s Index Fund (PXWEX).

The new WIL ETN from Barclays will follow a similar path.

The WIL will track the Barclays Women in Leadership Total Return Index, which only includes U.S.-based companies that have a female CEO and/or at least 25% of its board of directors as female members. The index also screens for market capitalization and trading volume threshold requirements. Tops among its 80-plus holdings are PepsiCo (PEP), Yahoo (YHOO) and International Business Machines (IBM), and expenses will run 0.45%, or $4.50 for every $1,000 invested.

According to the marketing literature, the basic idea is that female-led companies tend to do better than male-dominated peers.

There is some evidence that suggests firms with more women in top positions lead to higher returns on equity, lower overall volatility and market-beating returns for its stock. On the flip side, previously mentioned PXWEX managed to trail 56% of its peer mutual funds, according to data provided by Bloomberg. So just how much of an advantage is enjoyed by female-led companies is up for plenty of conjecture.

Investment ratings agency Morningstar’s recent research in SRI investing shows that many of pros and cons of the style tend to cancel each other out over the long haul. Basically, it means there’s not a ton of difference between SRI indices and broader ones.

Also, more women tend to be in top positions in “boring old blue chips.” These sorts of companies tend to steadily chug along, pay their dividends and see their share prices rise over time. By nature, they’re less volatile stocks to own anyway.

The gender and pay gap is a major issue — one that needs to be solved. But betting on PepsiCo simply because Indra Nooyi is the CEO isn’t going fix things.

And it certainly doesn’t mean WIL is worth an investment.

Here’s Where It Gets A Bit Dubious

Unlike ETFs, which physically own the underlying assets they track, ETNs are unsecured, unsubordinated debt — essentially bonds whose performance is tied to an index. They don’t actually hold anything. This makes them perfect for certain kind of assets like master limited partnerships (MLPs) or commodity futures, as they don’t trigger any of the nasty tax side effects of these asset classes. More importantly, they don’t incur any tracking errors — minus expenses — for their “holdings.”

And as Barclays knows, ETNs are also a really quick and relatively easy way for a bank to raise money.

Since ETNs don’t actually hold the assets they track, investors’ money basically becomes the bank’s money. Sponsoring firms can more or less do what they want with it. Investors get an IOU tied to an index. That’s all fine and dandy — for the most part.

However, due to the ease of launching one of these things, whatever is popular at the moment can become a funding vehicle for a sponsoring firm. And considering many ETNs have early call provisions, investors can be left high and dry if that popular theme turns out to be crap.

Women’s rights, LGBT rights, the pay gap — they’re all hot-button issues right now. All the evidence you need of that is the #YesToAllWomen campaign on Twitter.

The question you have to ask yourself is: Is Barclays really concerned about raising awareness of and supporting women’s equality? Or is it trying to strike while the iron is hot and raise some capital?

Now, is Barclays really concerned with women’s issues or is it trying to quickly strike and raise some capital? I’m not sure.

It does have some hefty fines and legal bills coming its way.

Bottom Line

Looking back at ETN launch histories, most of the gimmicky funds have been created when their respective sectors have been in the news obsessively. There was a dearth of leveraged and specialized commodities ETNs launched right when it seemed that China couldn’t possibly get enough iron ore and corn. The past few years have seen precarious income-oriented ETNs designed to combat low interest rates.

The real bottom line for investors is that when it comes to ETNs — and really all investments — due diligence is key. You have to ask whether the product really seems to have any way to benefit an investor, not just the sponsoring firm.

Thematic investing can die at the drop of hat. In the case of WIL, I suspect that will come true as well.

As of this writing, Aaron Levitt did not hold a position in any of the aforementioned securities.