Exchange-Traded Notes Can Be Better Than ETFs

The currency ETNs have an expense ratio of 0.40%, the same as the Rydex family of currency ETFs; the expense ratio on the covered call ETN is 0.75%.

Bear Stearns' first ETN, the BearLinx Alerian MLP Select Index (BSR), tracks energy-related Master Limited Partnerships. It was launched in July. Unlike the iPath products, it does make a income distribution on which investors must pay annual taxes

Although investors can also invest in currencies and commodities through a number of mutual funds and ETFs, these products don't have the same tax advantages as the iPath ETNs. For example, currency ETFs hold interest-bearing instruments in the specific currency are taxed as ordinary income, although not until the securities are sold.

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