Final answer:
ETFs own a collection of assets and track the performance of a specific index, while ETNs are debt securities that promise to pay a return based on an index or benchmark but do not own physical assets. Neither ETFs nor ETNs guarantee economic success, but diversification can help manage investment risk.
Step-by-step explanation:
Exchange-Traded Funds (ETFs) and Exchange-Traded Notes (ETNs) are both types of exchange-traded products commonly utilized by investors as part of a diversified portfolio. An ETF is a type of investment fund and exchange-traded product, it owns a collection of assets -- like stocks, commodities, or bonds -- and typically tracks the performance of a specific index.
On the other hand, an ETN is a senior, unsecured, unsubordinated debt security issued by an underwriting bank, which has characteristics similar to bonds but does not actually own any assets; instead, it promises to pay the holder a pattern of returns that follow an index or other benchmark.
Regarding diversified savings and investing portfolios, having a mix of different financial instruments, like ETFs and ETNs, does not guarantee economic success, but it can manage risk by spreading investments over various asset classes.
Diversification is a widely recommended strategy to protect against market volatility and reduce the impact of unfavorable performance in any single investment. However, investors must still conduct thorough research and consider other factors like economic conditions and personal financial goals.