ETNs -EXCHANGE TRADED NOTES
ETFs & ETNs look similar but they are fundamentally different; ETPs include both.
ETFs may hold stocks, bonds, commodities & commodity futures. They may have dividends & most issue 1099s, not K-1s. If the ETF sponsor gets into trouble, the ETF assets can be merged with another fund or liquidated at fair value.
ETNs hold nothing & are unsecured, senior debt/IOUs of the issuers who promise to pay back based on the gains/ losses of the stated indexes with leverage. Of course, the issuers get lumpsums from the initial issuance & that can change from continuing creation/ redemption; they also collect ERs based on the current values. They can invest this money, but they are obliged to pay back based on the leveraged performance of stated indexes. ETNs don't have dividends or CG distributions & issue K-1s.
There is huge trouble for ETN holders if the ETN sponsors get into financial trouble. Then, the sponsors can take defensive actions such as suspending ETN creations/ redemptions (ETNs then have premiums/ discounts), redeeming ETNs based upon timing that may suit them (but not the holders) or declaring default or bankruptcy. So, a troubled ETN can potentially go to 0 because there aren't any ETN assets to salvage - the ETNs holders are just the senior creditors of the sponsors.
Leverage creates additional issues, but less so for ETNs than ETFs. Because there are no underlying portfolios to manage, ETNs can mathematically track indexes with +/- Nx more accurately. The ETFs use futures to track indexes daily with the stated +/- Nx by adjusting holdings & leverage, but the leveraged effect achieved for longer periods will be different than the goal +/- Nx. Sponsors typically offer both +Nx & -Nx leveraged ETPs & collect the ERs regardless of whether investors win or lose; one in the pair may go bust or may requires reverse-splits.
SEC finally approved Rule 18f-4 (adopted 10/2020, effective 02/2021, compliance by 08/2022) that limited traditional fund leverage to 50% of gross assets (or 100% of net assets) & limited derivative-based leveraged ETFs to +/- 2x (existing +/- 3x ETFs were grandfathered). Unfortunately, SEC excluded the ETNs from these limits. This had an unintended consequence of encouraging more +/- 3x ETNs.
Exampled of failed ETNs include sponsors such as Lehman Brothers (bankrupt, 2008), Credit Suisse (merged into UBS, 2023/24); several oil/ gas & mREIT ETNs collapsed during the extreme energy volatility in 2020.
Stay away from ETNs! Stick to basic ETFs.
Investopedia
https://www.investopedia.com/financial-edge/0213/etf-or-etn-whats-the-difference.aspxSEC Rule 18-f4
https://www.sec.gov/newsroom/press-releases/2020-269Google AI & AI Mode
Info scattered within this site
https://ybbpersonalfinance.proboards.com/ 
