Investing with peace of mind
Stock markets have been facing challenging headwinds since the start of the year. The Hang Seng Index closed at 19,111* points on 29 February 2016, paring off close to 10,000 points from its highest close of 28,443† in 2015. No wonder investors' appetite for bottom fishing is warming. What many investors may not be aware of, however, is that there is a risk diversification strategy that requires only a small amount of capital. By adopting such a strategy, investors may add quality assets to their portfolios and weather market volatilities. In other words, there is a way to pocket an attractive return with limited capital. Investing in a large number of stocks and spreading your investments across a wide range of assets are the ways to diversify risk. However, some investors may not have enough capital to invest in multiple assets, or they simply do not have the time to manage a multi-asset portfolio. This is where Unit Trusts come into play.
Unit Trusts are a form of collective investment through which professional fund managers pool capital from a group of investors and invest the sum according to a set of predetermined objectives. For example, for a global equity fund comprised of dozens of stocks, the minimum capital requirement may be as low as USD1,000. With Unit Trusts, investors are able to optimise their asset allocations globally and diversify risk with a limited amount of capital.
Besides the aforementioned features, there are other advantages of investing in Unit Trusts. Firstly, it provides a convenient means for investors to invest globally across different markets and asset classes, such as equities, bonds, currencies and commodities. By investing in a diversified mix of assets, investors may reap the benefits of risk diversification.
Secondly, fund managers evaluate the metrics of macroeconomic factors before investing in their chosen stocks, bonds or currency markets. This is the equivalent of dining at a private kitchen where the chef draws upon years of training and experience to pick only the finest ingredients from the market to compose a dish tailored to your personal preference. Investing in Unit Trusts is as simple as entrusting an expert chef with creating a well-balanced dinner menu.
In addition, there are two methods for investing in Unit Trusts – by making a lump sum investment or by making monthly contributions. From little acorns grow mighty oaks, and the monthly-contribution method is an effective way to overcome the high barrier to entry of certain investments. Moreover, Unit Trusts are denominated in various currencies to suit the needs of investors. Throughout the investment process, investors are able to allocate or redeem units on any trading day, making Unit Trusts a flexible way to deploy capital.
*Source from ET Net on 29 February 2016
†Source from ET Net, The Hang Seng Index closed at 28,443 points on 28 April 2015 which is its peak in 2015
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Additional risks are disclosed in the "Risk Disclosure" section. Please refer to "Risk Disclosure" section for details.
Bonds/CDs/Deposit Plus (DPS)/Capital Protected Investment Deposit (CPI)/Equity linked investments (ELI) and UT are not equivalent to time deposits. DPS/CPI/ELI/CDs are not protected deposits, and they are NOT protected by the Deposit Protection Scheme in Hong Kong. DPS/ELI are not principal protected.
Bonds and Certificate of Deposits (CDs) Risk Disclosure
Renminbi related products Risk Disclosure
China A Shares Risk Disclosure
Foreign Exchange Risk Disclosure
Margin FX Risk Disclosure
DPS and CPI Risk Disclosure
Equity Linked Investments Risk Disclosure
The following risks shoud be read together with the other risks contained in the "Risk Warnings section in the relevant offering documents of the ELIs
Unit Trusts Risk Disclosure
Risks associated with the MRF arrangement
Mainland China Equity risk
Risk associated with small-capitalisation/mid-capitalisation companies
Risk associated with ChiNext market
Mainland debt securities risks
Risks associated with repurchase and reverse repurchase transactions
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The information contained in this material have not been reviewed by the Securities and Futures Commission of Hong Kong or any regulatory authority in Hong Kong.
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