 Hey guys, it's MJ, the Student's Actory, and in this video, I'm going to be talking about exchange traded notes, and what better way to explain them than to go and buy some ourselves for our YouTube equity portfolio. Well, it's no longer going to be just purely equities because the exchange traded notes are going to allow us to introduce commodities into our portfolio. So first off, what we need to do is let's just get this site showing all of them. First thing that you should notice, especially if you're a South African viewer, that these are banks. Exchange traded notes are debt instruments. They're debt instruments and they're issued by an underwriting bank, which means there is a probability of default. But how can it be a debt if we're buying pallidium? I don't even know what, I didn't do too well in science. I don't know what pallidium is, but what we're going to be doing is we're going to be adding some pallidium to our portfolio. So interestingly, there isn't the security tax, which is good. So we're only paying fees of 0.39. Let's confirm that instruction. Yay, we've bought some pallidium. But I want to get all of them. I want to get all the commodities into our portfolio. And remember, you guys need to leave your own recommendations. I know in the last video, I've got a request for discovery shares, which is an actuarial company. So we are going to be buying them as well. Okay, let's add in some platinum. Platinum, once they used to be more valuable than gold, but kind of has gone down. Platinum very much is a South African metal. We produce a lot of this stuff. Okay, so we're getting some platinum. So what is nice about exchange traded notes is it would be really difficult to go out and buy some platinum myself. It's kind of like, well, where would I put it? What would I do with it? Someone might come in and steal it. So what these things do is they do allow us to get access to these alternate assets that we didn't really have access to. Yeah, let's get some copper as well. So we're going to be buying some copper. Now one thing that you do need to be careful of, and which is why we're doing it with demo money. This is not real money that we're using. Real money, I would be a lot more risk adverse when buying commodities just because they are quite volatile, but also because of a thing called Contango. And that means that the prices of these things is increasing because we are incurring that cost of carry. So if the commodity prices don't go up well enough, we are going to be losing money. And a lot of investors don't take that into consideration. It doesn't want us. The security is currently only available for trading through a buy instruction. What is it? So we can't buy copper. That's interesting. Let's go buy a different one. Let us buy platinum. Doesn't want us to buy copper. This website bounces around. It's a little bit annoying, but yeah, let's go get some corn. Let's add some corn to our little fund. So we're going to add in some corn. So remember, there is a big difference between an exchange traded note and an exchange traded fund. An exchange traded fund actually goes and buys the underlying asset, whereas the exchange traded note is kind of like it's a debt instrument that depends on that amount. So the bank doesn't actually go and buy corn necessarily. They might manage their risk by buying corn derivatives, which is something else that we could have done. So that is an alternative to an exchange traded note is buying a certain derivative. But the cool thing about this thing is that it is on the exchange. So yeah, do we get some corn? Okay, we've got some corn. We've got some platinum. We've got some palladium. Okay, let's get some more. Let's get some more ETNs. What else can I tell you about exchange traded notes? Oh, some of them allow for gearing. Those are quite interesting. So if they say a 1% increase in gold, they pay out 2%. But on the same token, if gold goes down by 1%, they decrease by 2%. So you can build in this artificial leverage with exchange traded notes. You can get, start having a lot of fun, being very creative with them. We are selling at the bid of zero. That is weird. It's weird to see some of these things once off. Let's see. Oh, I can only buy up to 56 round. That? Why? Why can't we just buy 56 round worth of, is this wheat? No, we want the wheat, okay. This is weird. Why is it only an enemy? Maybe that's why the other one didn't go through is because I was going over the maximum amount. But how can I, I mean, why would you want 56 rounds worth of wheat? If you want 56 rounds worth of wheat, you just go to the grocery store and actually physically buy the wheat. I mean, you can't go to the grocery store and just buy platinum. That'd be quite interesting. Imagine going to like the pick and pay and there's like the platinum aisle. And you're like, oh, let me add a few little, you know, bullion bars of platinum to my grocery list. We want to go where exchange traded notes. What else can I also tell you guys? There's no tracking error with these guys. So with an exchange trader fund, you might have a little bit of a tracking error because they're trying to replicate the index. Whereas with these guys, because they're not actually storing the actual asset, there is no tracking error that you have to have to worry about. Okay, we are buying, what are we buying here? We are buying oil. Let's buy some oil. Okay, we're buying some oil. I just had a very fast motorbike drive past my apartment. So sorry if you, if you heard that, that engine, but it shows that people need oil. That guy is going to need some oil later on and that should push the price up if the demand increases. Okay, let's get a few more of these exchange traded notes. What else can I tell you guys about it? I mean, you can also sell them short. I don't know if you can do that on this platform. That would be quite cool. So then you make money if the price goes down. So you can either sell them short or you can actually get a reverse exchange traded note, which when gold goes up 1%, it goes down 1% and vice versa. Other thing to know is that you are going to be paying the bank a bit of a fee to do this. So, but it's the fees taken in the bid and offer spread. So it's not coming up where we normally see fees, but it is, it is there. I think you're less by silver. This will be our last one. And then we have enough exposure, I think, to the various commodities. They do add a little bit of diversification because they're not as correlated to the rest of the market. But we'll see, we'll see how well they do. Okay, confirm this instruction. So there we go. I mean, although it's, I think I'm out of market time. So these are going to be pending. They're only going to go through tomorrow, I think. The market has closed, but it's quite cool that the website still allows me to purchase, even though the website is closed. Okay, so let's just recap. I've spoken about that it's a debt instrument, whereas an exchange trader fund actually holds the assets. Even though it's a debt instrument, it's not paying any interest. Instead, the payment depends solely on these things, which does give you a little bit of a tax advantage in that you're delaying the payment of tax. So with a normal thing, like if you're getting dividends or stuff like that, you pay tax on that. With an exchange trader note, you only pay your tax right at the end when you sell it or when this thing matures. And that slight delay can give you a little bit of a cash flow benefit. So there are some potential tax efficiencies. It gives you improved liquidity. I mean, you can trade with the bank, the bigger the bank, the more liquid the market will be. There'll be like a bit of a market maker. And yeah, I've spoken about how it's given us access to wheat and corn and some really interesting little commodities. And what else can I tell you guys about exchange traded notes? I mean, yeah, I guess that that is about it. So yeah, let's go have a, oh, and I want to just quickly buy the discovery shares because that was recommended by one of you. Discovery, there we go. Limited B preference share. Now let's just buy the normal discovery. This is an actuarial company in the health sector doing medical aid and all that type of stuff. Really cool, really cool company. So I'm quite happy to add them to our portfolio. But y'all, they have to pay that security transfer tax. So a little bit more expensive than the exchange traded notes, but we're going to be confirming this instruction. And y'all, there we go. We have added exchange traded notes. And I hope that gives you a better understanding of what these instruments are. They are a little bit intimidating. They do, you know, like I said, especially with commodities, there is that Contango, which does add in a little bit of hidden costs. So you have to be very, very careful when you start buying these things with real money. But that's what we're playing around with demo money. So this is not financial advice. This is purely educational. So, yeah, always be responsible when you're fooling around on these platforms. Anyway, guys, thanks so much for watching. And let me know what shares I should buy. And if you're not South African and you don't know our stock market that well, then just give me some sectors that you think I should buy. Should I buy banks? Should I buy tech communication companies? Should I buy mining companies? Should I buy service companies? Let me know in the comment section below and we will buy them. This is the YouTube portfolio where you guys are going to be doing most of the investing. I'm just putting small amounts in these various things. But thanks so much for watching and I'll see you guys next time for another video. Cheers.