Learn More about Opta Exchange Traded Notes
Opta ETNs vs. Comparable Instruments
Shown below is a comparison of ETNs to other investment vehicles. We compare ETNs to ETFs and index mutual funds because all three instruments provide exposure to an index.
| EXCHANGE TRADED NOTES (ETNs) | EXCHANGE TRADED FUNDS (ETFs) | OPEN-ENDED INDEX MUTUAL FUNDS1 | |
| Issuance Type | SEC-registered debt security | Registered Investment Company (often, but not always)2 | Registered Investment Company |
| Ownership | Senior, unsecured debt securities of the issuer | Represents a stake in the underlying assets | Represents a stake in the underlying assets |
| Credit Risk | Subject to the issuer’s capacity to pay | N/A | N/A |
| Liquidity | Via an exchange (intraday), or cash repurchase by the issuer (daily)3 | Via an exchange (intraday), or in-kind redemption by the issuer (daily)3 | Only via sale at the market-close NAV (daily) |
Tracking Error |
ETN issuers are obligated to deliver the index performance less fees in cash (upon redemption or maturity) | Fund manager obligated to deliver NAV less fees upon redemption | Fund manager obligated to deliver NAV less fees upon sale |
| Annual Fees4 | 0.40% - 1.25% | 0.14% - 0.82% | 0.01% - 1.59% |
| Pricing | Intraday | Intraday | End-of-day NAV |
| Maturity | Typically 15 to 30 years |
N/A (perpetual) | N/A (perpetual) |
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1 Open-ended mutual funds
2 Some 'ETFs' are actually registered as trusts, partnerships or commodity pools
3 Repurchases are subject to minimum size requirement
4 Source: Strategic Insight December 31, 2007. Fees represent 5th to 95th percentile range of entire ETF and Index Mutual Fund universe. ETN fee range reflects the range of all currently-available ETNs
Correlation and your portfolio
choices
Correlation measures the strength of the relationship between the respective performances of two asset classes. Investing in an asset class that has a low correlation to the other investments in your portfolio enhances diversification.
