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What are the differences between ETF and ETN?



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Hello Kelvin,
Exchange-traded funds are close counterparts to exchange-traded notes. However, these two have some major differences between them.
Investors should, therefore, study both of them critically and understand their pros and cons before deciding on what they will invest.
Exchange-traded funds are a market-linked investment that is provided as a senior note or debt. ETF, on the other hand, portrays interest in a fundamental asset.
ETN are usually not secured, which is why they perform just like bonds. ETF investments are taken into a fund that carries the properties it traces just as it does with stocks and bonds.
ETN has credit risk, while ETF, on the other hand, roughly lacks credit risk. However, ETF posses tracking risk, which means that the returns of ETFsand its underlying asset will probably differ.
In terms of tax treatment, ETN pursues its essential indexes less their annual expense. Different from ETF, ETNs do not track errors.
Stockholders should view ETN as liquidated agreement. Therefore the differences in buying and selling should be taken as capital gains.
ETN result from long-term capital gains and should, therefore, have a more favorable tax treatment in contrast to ETF that result from short-term capital gains.

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