ETFs, ETNs and Funds are investment products that hold assets that track various sectors or industries. These can be stocks, bonds or commodities.
ETF stands for Exchange Traded Fund. They basically trade like a stock on an exchange. They hold the underlying assets. However, the value of the ETF as a whole may not be exactly what the value of the underlying assets being held is. This is because their shares trade on exchanges.
ETN stands for Exchange Traded Note. They are similar to ETFs. However, instead of buying and selling the underlying assets, a note is issued by an investment company, that represents a stake in the underlying asset. ETN’s usually have a fixed time period, similar to bonds.
Funds or mutual funds are assets managed by an investment manager. You buy into the fund and reap the rewards of the investment managers gains and suffer his or her losses.
There are two types of funds. Closed end funds and open end funds.
Closed end funds are similar to ETFs, because they trade on an exchange and are valued that way.
Open end funds do not trade on an exchange. You buy and sell them from the investment company at the NAV, or net asset value. When you want to exit the fund, you redeem your shares from the investment company. There may be rules about how you can do this. There may also be fees an investment company charges to redeem your fund’s shares. These are called back end fees.