Exchange traded products, or ETPs, are a variety of financial instruments that are traded throughout the day on national exchanges.
Each ETP will have a benchmark index that it seeks to track. Some ETFs can track quite common markets, such as the FTSE 100, but you can also find ETPs which track exotic and specialised benchmark indexes such as sector-specific shares which pay a high dividend.
There are three main types of ETP:
- ETFs, or exchange traded funds. Their price tracks that of a set of financial assets, like an index.
- ETNs, or exchange traded notes. A form of debt security. These products have the least regulation imposed on them an investors should take extra care when investing in an ETN.
- ETCs, or exchange traded commodities. Similar to ETFs, but tracking either a specific set of commodities or an index of commodities.
