You've heard of exchange traded funds (ETF's). But now, there's a new option…exchange traded notes. Investors can now purchase exchange traded notes, which function similarly to ETF's except they are debt securities backed only by the credit of the issuer. For commodity investors, the iPath Dow Jones-AIG Commodity Index Total Return ETN may be worth considering.

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Exchange Traded Notes Make Debut

Investors now have a new way to invest in commodities - iPath exchange-traded notes.

The index-lined notes, the first two of which began trading on the New York Stock Exchange yesterday, are issued by Barclays Bank PLC in London, and sold through its subsidiary, Barclays Global Investors in San Francisco.

The notes, which are the first of their kind, are similar to exchange traded funds in that they follow an underlying index.

Exchange-traded notes, however, are debt securities backed only by the credit of the issuer, whereas ETFs are typically registered investment companies and are collateralized by an underlying portfolio of securities.

The notes that began trading yesterday are the iPath GSCI Total Return Index ETN and iPath Dow Jones-AIG Commodity Index Total Return ETN.

The iPath GSCI Total Return Index ETN provide investors with exposure to the returns available through an investment in the contracts comprising the Goldman Sachs Commodities Index, plus the Treasury Bill rate of interest that could be earned on funds committed to the trading of the underlying contracts.

The iPath Dow Jones-AIG Commodity Index Total Return ETN, provides investors with exposure to the returns that are available through an investment in the contracts comprising the Dow Jones-AIG Commodity Index plus the rate of interest that could be earned on cash collateral invested in specified Treasury Bills.