Exchange Traded Product - ETP
Commonly you hear the term ETF, which stands for exchange traded fund. And some of you may be familiar with the term ETN, which is a variation of an ETF known as an exchange-traded note. But sometimes you’ll see the term ETP, and that’s where the confusion sets in. However, there is no need to be confused at because ETP simply stands for exchange traded product.
An Exchange Traded Product is just the catch-all phrase for ETFs, ETNs and sometimes ETFs of ETFs, which are truly just ETFs as well. So when people refer to ETP’s they are just referring to notes and funds as a whole. All of the exchange traded products.
As I said, there are two types of ETPs – notes (ETNs) and Funds (ETFs). But sometimes people do break ETFs of ETFs (funds of funds) into a third category as well. So let’s check out each of these categories that fall under exchange trade products.
What are ETFs?
An Exchange Traded Fund is an index-based investment (or sometimes another underlying asset) whose performance is based on its correlating index or asset. It is a mini portfolio of equities, futures, and other derivatives pre-packaged and designed to track a correlating investment.
This entire site is devoted to exchange traded funds, so there is plenty of content if you want to learn more. And to help you get started, I suggest reading these articles first for a better grasp of this type of investment…
What are ETNs?
ETNs aren’t as popular as ETFs and are a little less popular. Simple, an ETN is an exchange-traded note. They are structured investment products that are issued by a major bank or provider as senior debt notes. It differs from an ETF which consists of an actual security or sometimes commodity or currency derivative such as futures, forward and options.
There is plenty of content on this site about exchange traded notes as well. And to help you learn more about ETNs, I suggest reading the following articles first…
What Are ETF of ETFs?
A third type of ETP that sometimes people like to mention is an ETF of ETFs. Typically this falls under the class of ETF, but some do like to break it out. Like a fund of funds mutual fund, which is a mutual fund consisting of other mutual funds, ETFs of ETFs are exchange traded funds that consist solely of other ETFs.
If it sounds simple, it is. At least in description, but structuring these types of funds isn’t easy. However, if you want to learn more and see if these assets might be a fit for your portfolio, I suggest you read this article…
What Are Exchange Traded Mutual Funds?
Most recently there has been a new ETP innovation, ETMFs. Exchange Traded Mutual Funds. They are basically the new combination of ETFs and actively managed open-ended mutual funds. The short version is these hybrids are a standard net asset value (NAV)-based mutual fund that trades in real-time on a stock exchange.
So as you can see, there are a few different types of exchange traded products you can use for your investing strategy. You don’t have to be confused by ETPs anymore. Just make sure you conduct the proper research before you make any trades. And if you have any questions, please consult your broker or a financial professional.
And, of course, there is plenty of material on this site to help you with your cause. We have content covering that basic types of ETPs as well as lists of the many specialized products so you can see them in action for yourself. Research is the key to any trading strategy, and there is plenty material here to help you on your way. Enjoy.