iPath® Exchange Traded Notes (ETNs) are designed to provide cost-effective exposure to a specific asset class or index in a similar way to Exchange Traded Funds (ETFs) and Exchange Traded Commodities (ETCs).
iPath® ETNs are different from these products in two key areas:
iPath® ETNs are normally 30 year bonds that are issued by Barclays Capital, the investment banking division of Barclays. Unlike most bonds, at maturity there is no repayment of capital and no interest distribution over the life of the bond. The return is the direct performance of a specific index. This means there is no tracking error and you have a single identified counterparty risk. iPath® ETNs are exchange listed, so like ETFs and ETCs they can be traded like a share, with real-time prices available when the markets are open. iPath® ETNs are designed to be traded rather than held to maturity.
iPath® ETNs were launched on the London Stock Exchange in April 2010 with 9 that offer access to commodity indices and 3 that track stock market volatility, through products tracking the EuroStoxx and S&P VIX.
| Ticker | iPath® ETN |
| Volatility | |
| VXIS | iPath® S&P 500 VIX Short-Term Futures ETN |
| VXIM | iPath® S&P 500 VIX Mid-Term Futures ETN |
| VSXX | iPath® VSTOXX Short Term Futures ETN |
| Commodity | |
| DJUB | iPath® DJ-UBS Commodity Index SM TR ETN |
| SPGS | iPath® S&P GSCI Index Total Return ETN |
| AGGS | iPath® S&P GSCI Agriculture Index Total Return ETN |
| NRGY | iPath® S&P GSCI Energy Index Total Return ETN |
| SEED | iPath® S&P GSCI Grains Index Total Return ETN |
| SOFT | iPath® S&P GSCI Softs Index Total Return ETN |
| IMET | iPath® S&P GSCI Industrial Metals Index Total Return ETN |
| PMET | iPath® S&P GSCI Precious Metals Index Total Return ETN |
| MOOO | iPath® S&P GSCI Livestock Index Total Return ETN |
iPath® ETNs carry an explicit all-inclusive annual management charge and there are no additional charges levied to the product.
iPath® ETNs allow investors to obtain clearly identified exposure to markets that have traditionally been difficult or expensive to access. The returns represent the performance of the index less the annual management fee; please see the factsheets for more information on this fee. There are no sundry or other expenses incurred.
As the bonds underlying iPath® ETNs are issued by Barclays, the repayment of your investment and return is dependent upon the ability of Barclays to meet its commitments. If Barclays fails to do so, you may get back less than is due to you or nothing at all. The actual or perceived creditworthiness of Barclays may affect the value of your investment. iPath® ETNs do not offer any assurances that your capital will be repaid; you may get back less than you invest.
While having features similar to ETFs and ETCs, iPath® ETNs are bonds issued by Barclays which pays a return derived from a target index or underlying asset. As a consequence, Barclays is your counterparty and the repayment of your funds, regardless of the performance of the underlying assets, is at risk and dependant on the ability of Barclays to meet its obligations. Further, the price at which you are able to buy and sell iPath® may be affected by the perceived creditworthiness of the bank as well as the level or the index or underlying asset that the specific iPath® tracks.
iPath® ETNs are traded like shares and may not be for everyone. As they track the performance of an index or underlying security, their value can go down as well as up and you may get back less than you invested
iPath® ETNs and the market sector or indices which underlie them are usually denominated in US Dollars or Euro. So if you invest in Sterling, your investment will be impacted by movements in exchange rates as well as the underlying instrument.
iPath® ETNs which track commodities, like ETCs, can be affected by “roll yield”. Investments in commodities are normally made through buying futures contracts on the product rather than holding the underlying commodity. As a result the index can be distorted by pricing difference between the spot market prices and futures contract prices. This can have either a positive or negative impact and is referred to as roll yield. See the frequently asked questions (FAQs) for an explanation of roll yield and its potential impact on your investments.
iPath® ETNs are currently exempt from Stamp Duty, but please bear in mind that this may change in the future.
Barclays Stockbrokers does not offer advice to investors, including tax advice. If you are in any doubt as to the suitability of these investments for you, including their tax treatment please seek independent financial advice.
Barclays Stockbrokers is the Group name for the businesses of: Barclays Stockbrokers Limited, a member of the London Stock Exchange and PLUS. Registered No. 1986161; Barclays Sharedealing, Registered No. 2092410; Barclays Bank Trust Company, Registered No. 920880. Registered VAT No 243 8522 62. All companies are registered in England and the registered address is: 1 Churchill Place, London E14 5HP. All companies are authorised and regulated by the Financial Services Authority.
ETCs vs ETFs
Understand the differences between ETCs and ETFs
