What is an ETP? Simply explained

Exchange-traded products (ETPs) are financial instruments listed on stock exchanges that offer easy access to a wide variety of asset classes — including stock indices, commodities, and even cryptocurrencies like Bitcoin and Ethereum.

What does ETP mean?

ETP stands for Exchange-Traded Product. Exchange-traded products are a broad category of exchange-traded securities that includes ETFs (Exchange-Traded Funds), ETCs (Exchange-Traded Commodities), and ETNs (Exchange-Traded Notes). These products are all listed on stock exchanges and aim to replicate the value of an underlying asset — whether it’s an index, commodity, or digital currency.

What types of ETPs are there?

ETPs are generally classified into three types:

ETFs track market indices like the MSCI World. These are segregated funds, meaning your assets are legally protected if the provider becomes insolvent.

ETCs focus on commodities such as gold or oil and are often structured as debt instruments. Investors carry issuer risk in these products.

ETNs are unsecured debt securities, often tracking niche markets. They are not backed by physical assets and are considered riskier.

At Peaks, we specialise in ETFs, but offer a few investing options that fall outside ETFs, including cryptocurrency ETPs.

How do ETPs work?

An ETP allows you to gain exposure to a specific market — such as an equity index, commodity, or cryptocurrency — without owning the asset directly. Instead, you invest in a financial product that tracks its price. For example, a Bitcoin ETP is backed by actual Bitcoins held in secure custody, while your ETP unit reflects Bitcoin’s market movements. 

ETPs are traded on regulated exchanges like Xetra, offering transparency and investor protection.

What are the benefits and risks of ETPs?

Benefits:

• Simple and quick access to global markets and alternative assets
• No need for wallets or technical setups, especially with crypto
• Transparent and regulated environments
• Typically lower fees than actively managed funds

Risks:

• Market risk: Your investment value falls if the underlying asset drops
• Issuer risk: Your return depends on the provider's financial health
• Tracking error: ETPs may not perfectly follow their target index or asset
• Liquidity risk: Volatility can increase in thinly traded markets

Why are crypto ETPs popular?

Crypto ETPs allow users to invest in cryptocurrencies like Bitcoin or Ethereum without dealing with wallets, private keys, or exchanges. These products are traded on regulated exchanges and are secured by specialised custodians like Komainu using cold storage — significantly reducing cyberattack risks.

Many providers are also regulated by European financial authorities, such as BaFin, offering more protection than typical crypto exchanges.

Disadvantages of crypto ETPs compared to direct crypto investing

While crypto ETPs are convenient and regulated, they come with limited trading flexibility. Cryptocurrencies are traded 24/7, but crypto ETPs can only be traded during exchange hours — usually Monday to Friday from 9:00 a.m. to 5:30 p.m. At Peaks, client orders are processed once a day on the days when the exchange is open. This means you can't always react immediately to price drops or surges outside the exchange’s trading hours. For example, if Bitcoin drops significantly overnight, you'll have to wait until the next trading window — potentially increasing your losses compared to direct crypto ownership.

How can you use ETPs with Peaks?

Alongside readymade ETF portfolios, the Peaks app allows you to invest in regulated crypto ETPs like Bitcoin or Ethereum — no wallet, passwords, or exchanges required. You can build your own custom portfolio and add these ETPs in.

Before investing in crypto ETPs, Peaks provides a short knowledge check to ensure you understand the risks of investing in crypto ETPs. It’s a combination of accessibility, education, and safety that makes sure that you understand what you’re investing in before you get involved. As always, you should keep in mind that investing always involves risk. You stand to lose (part of) your invested money.