My Personal Finance Journey

Personal finance observation, musing and decisions in a journey toward financial independence by 2020 with at least $3 million.

By Topics

0. About (10)
1. My Progress (139)
2. Car & Home (107)
3. Credit (138)
4. Banking (33)
5. Saving (49)
6. Investing (308)
7. Taxes (89)
8. Spending (74)
9. Misc (97)
A. Archive (49)


Feb 2014 (3)
Jan 2014 (6)
Jan 2012 (1)
Apr 2011 (1)
Mar 2011 (1)
Feb 2011 (1)
Jan 2011 (1)
Dec 2010 (1)
Oct 2010 (1)
Sep 2010 (1)
Aug 2010 (1)
Jul 2010 (1)
Jun 2010 (1)
May 2010 (1)
Apr 2010 (1)
Mar 2010 (6)
Feb 2010 (2)
Jan 2010 (7)
Dec 2009 (3)
Feb 2009 (4)
Jan 2009 (8)
Dec 2008 (1)
Jun 2008 (2)
May 2008 (2)
Apr 2008 (5)
Feb 2008 (3)
Jan 2008 (15)
Dec 2007 (32)
Nov 2007 (6)
Oct 2007 (8)
Sep 2007 (9)
Aug 2007 (24)
Jul 2007 (2)
Jun 2007 (1)
May 2007 (3)
Apr 2007 (4)
Mar 2007 (4)
Feb 2007 (13)
Jan 2007 (6)
Dec 2006 (3)
Nov 2006 (7)
Oct 2006 (7)
Sep 2006 (6)
Aug 2006 (4)
Jul 2006 (10)
Jun 2006 (1)
May 2006 (3)
Apr 2006 (2)
Mar 2006 (6)
Feb 2006 (6)
Jan 2006 (3)
Dec 2005 (1)
Nov 2005 (9)
Oct 2005 (8)
Sep 2005 (13)
Aug 2005 (25)
Jul 2005 (16)
Jun 2005 (17)
May 2005 (19)
Apr 2005 (20)
Mar 2005 (24)
Feb 2005 (23)
Jan 2005 (36)
Dec 2004 (40)
Nov 2004 (34)
Oct 2004 (17)
Sep 2004 (21)
Aug 2004 (59)
Jul 2004 (37)
Jun 2004 (31)
May 2004 (29)
Apr 2004 (52)
Mar 2004 (49)
Feb 2004 (49)
Jan 2004 (31)
Dec 2003 (48)
Nov 2003 (52)
Oct 2003 (29)
Sep 2003 (8)
Aug 2003 (5)
Jul 2003 (2)
Jun 2003 (2)
May 2003 (5)
Apr 2003 (2)
Mar 2003 (2)
Feb 2003 (3)
Jan 2003 (29)


Is Exchange Traded Notes (ETN) Dead?

Contributed by mm | December 23, 2007 1:22 PM PST

ipath.jpgBack in November I studied Exchange Traded Notes (ETNs), a new genre of product with apparently better tax treatment than its much popular cousin Exchange Traded Funds (ETFs) with ETFs. The innovation of Barclays, ETNs are debt notes 1) issued by financial companies like Barclays, Goldman Sachs and Deutsche Bank and alike, 2) tracking a certain index like currency and commodities, 3) that can be traded in the stock exchange just like ETFs, and 4) being promoted with preferred tax treatment -- that is, there is no required distribution so that investors only have to pay tax when they finally dispose the ETNs.

Unfortunately, the preferred tax treatment is a claim by the issuing banks, and hadn't been confirmed by IRS ... until now.

According to MarketWatch, the IRS recently denied favorable tax treatment of most ETNs on the market:

Barclays PLC has suffered a setback by a U.S. Treasury Department decision that takes away tax advantages touted in exchange-traded notes it manages that give investors access to foreign currencies.

The Internal Revenue Service ruled Friday that any financial products linked to a single currency should be treated like debt for federal tax purposes, even if they are publicly listed on an exchange like ETNs. The news is the opening salvo in a hotly contested and closely watched battle between the mutual-fund business and the securities industry.

The agency's ruling only affects currency exchange-traded notes, but the IRS has also requested industry comment on ETNs tracking commodities and stocks. Industry observers say a second adverse tax ruling would be another defeat for Barclays and other ETN providers, and stall the industry's growth.

So what's next? My understanding is the new development is merely the IRS interpretation of the law that can be challenged in court. Actually, since Day One, the argument of ETN promoters is always that ETNs are differently structured products -- unlike an ETF which is backed by a pool of investments consisting of the index the ETN is tracking (a S&P 500 index ETF is composed of shares of the 500 companies), an ETN is essentially a debt note, and its investors bear the additional risk of issuing bank's survivability -- and therefore should be taxed differently. As quoted in the same MarketWatch article:

In early November, SIFMA Chief Executive Marc Lackritz wrote a letter to the Committee on Ways and Means defending ETNs, saying the tax treatment of financial products "should be driven by the product's tax attribute -- not by the desire to affect the competitiveness of one product over another in the market."

I mentioned back in November that ETNs' tax advantage, if confirmed, can make it much more appealing than index-tracking ETFs and mutual funds. Can we rule ETNs out now? Maybe not yet. I'll keep tracking its development and report on this blog over time.

This Post Has Received 21 Comments. Share Your Opinions Too.

Finna lvus Commented on July 17, 2017

They lost my job application. Just my luck!

You did a great job!


JacksonFarge Commented on August 20, 2017

e what does generic cialis look like according
tired|[url=]product team cialis getting ready to market[/url]
cialis vs. viagra

MelvinDonge Commented on August 20, 2017

l viagra precio arms
probably|[url=]mexican viagra[/url]
herbal viagra pills

FrankieJaw Commented on August 21, 2017

a tadalafil online bent [url=]buy cialis online[/url] cialis

JuliusClema Commented on August 21, 2017

t payday loans no credit check you [url=]payday loans online[/url] payday loans
f buy levitra world [url=]buy levitra online[/url] vardenafil
w canadian pharmacy online father [url=]canadian pharmacy reviews[/url] canadian pharmacy reviews

FrankieJaw Commented on August 21, 2017

x canadian pharmacy online dog [url=]canada drugs[/url] canadian pharmacy

JuliusClema Commented on August 21, 2017

n canadian online pharmacy often [url=]canadian pharmacy online[/url] northwest pharmacy
n buy vardenafil quarter [url=]buy levitra[/url] buy levitra
z buy generic viagra stop [url=]buy generic viagra[/url] buy generic viagra

Michaelabaft Commented on September 3, 2017

can you get a girl pregnant with viagra
viagra without doctor
can you get viagra canada
[url=]viagra without prescription[/url]
sildenafil pills

Dennislaf Commented on September 4, 2017

where to buy viagra buenos aires
viagra without prescription
que es el viagra generico
[url=]viagra without a doctor prescription[/url]
donde comprar viagra online foro

Richardfaw Commented on September 5, 2017

can you get viagra over the counter in amsterdam
viagra without doctor
price of viagra tablets
[url=]viagra without a doctor prescription[/url]
ireland viagra online

Ronaldknodo Commented on September 9, 2017

oxycodone withdrawal effects
alcohol rehab
detox tramadol
[url=]drug and alcohol rehab[/url]
prescription drug tramadol

JasonNeesy Commented on September 9, 2017

coke symptoms
alcohol rehab houston
how is heroin addiction treated
[url=]alcohol rehab houston[/url]
treatment for alcohol abuse

MichaelNub Commented on September 14, 2017

[url=]generic strattera[/url] [url=]levitra[/url] [url=]how much is amoxicillin[/url] [url=]generic tadalis[/url]

CharlesLiede Commented on September 14, 2017

[url=]levitra[/url] [url=]cialis[/url]

Bennyanymn Commented on September 15, 2017

[url=]medrol pack[/url] [url=]Cymbalta Generic[/url]

Patrickagift Commented on September 15, 2017

nomes de genericos de viagra
buy viagra
[url=]buy viagra[/url]
buy viagra pfizer online
buy cialis
[url=]buy cialis[/url]
how to get free viagra samples

Ronmutt Commented on September 16, 2017

Cheap Generic Viagra Online [url= ]online pharmacy[/url] Viagra Apotheke
Cheap Viagra Online Canadian Pharmacy
Viagra Prescription Only cialis price Canadian Pharmacy Cheap Amoxil

Donnienurce Commented on September 17, 2017

cheapest price generic cialis
cialis canada
cheapest source cialis
[url=]cialis online pharmacy[/url]
buy cialis sydney

Kennithmus Commented on September 20, 2017

how much is viagra pills
viagra without prescription
pill cutter viagra
[url=]viagra no script[/url]
can you buy viagra spain over counter

ScottHib Commented on September 20, 2017

order viagra internet
viagra without doctor
where can i buy viagra in hong kong
[url=]viagra without a doctor prescription[/url]
old must you buy viagra

Rolandfup Commented on September 23, 2017

buy cialis generic online
buy cialis
cialis tablete za zene
[url=]cialis online pharmacy[/url]
cialis pills south africa

Add Your Comments

Remember personal information?

(It will take a few moments for your comment to be published. Please do not close the window until then.)

Read More ... 312 Posts In The Same Category

This page was last rebuilt at September 23, 2017 05:11 AM PST. (475 Words)



Consumerism Commentary
Get Rich Slowly
My Money Blog
All Financial Matters
The Simple Dollar


Copyright 2003-2014, All Rights Reserved. (Privacy Policy)