Samsung Asset Management's leveraged & inverse products open up world of investment opportunities to Hong Kong investors
Leveraged and Inverse (L&I) Products have been gaining increasing traction among investors over the past few years. In different markets across Asia where L&I products have been available for some time, these strategies have attracted substantial interest and witnessed solid inflows, as investors have come to appreciate the added diversification that these strategies bring to their portfolios. L&I products represent no less than 24% of total ETFs assets under management (AUM) in Taiwan; they account for 13% of ETF AUMs in Korea, and 5% in Japan. These products have largely contributed to the increasing popularity and skyrocketing growth of the broader exchange traded product market.
Samsung Asset Management is no stranger to this development. In fact, it is one of the industry’s pioneers in the field of L&I products, with a long track record in bringing innovation to the market place. Samsung Asset Management holds the distinction of being the first asset manager to have introduced L&I products in Asia: it first rolled out L&I products in its domestic market, Korea, in 2009.
Samsung Asset Management has just rolled out a series of four L&I products in Hong Kong, marking the first time such products are available in the territory. The investment product series include the Samsung KOSPI 200 Daily (2x) Leveraged Product (07250), the Samsung KOSPI 200 Daily (-1x) Inverse Product (07326), the Samsung TOPIX Daily (2x) Leveraged Product (07255) and the Samsung TOPIX Daily (-1x) Inverse Product (07311). All four products will commence trading on the HKEx on June 13, 2016. The move will most certainly not go unnoticed among the most sophisticated Hong Kong investors, who will be given the opportunity to dramatically expand their investment universe thanks to these new strategies.
Indeed, the Samsung L&I investment product series is largely expected to make a splash among investors keen to make the most of the volatility in markets, and there has been no shortage of that lately - without compromising on liquidity. Investors will most certainly appreciate the unique features of the L&I series: unlike other non-traditional strategies that require large investment amounts or impose a lock-up period, all four products offer daily liquidity and trade like public-listed stocks on the HKEx, while allowing investors to experiment with non-traditional strategies without breaking the bank.
This new product lineup represents nothing short of a paradigm shift in the Hong Kong investment community. It opens up a new world of opportunities for investors, by offering them the possibility to either "short" a market or "leverage" their investments for the first time in Hong Kong. Leveraged products aim to deliver results amounting to twice (2x) the daily performance of the index tracked, while inverse products provide a performance that closely corresponds to the inverse (-1x) daily performance of the index tracked.
While these products have the potential to deliver attractive returns over the short term, the investing concept of these strategies is not always fully understood by Hong Kong investors. These products carry very specific risks, which do not apply to other mainstream ETFs. While L&I products aim to deliver well-defined investment results using either leveraged or inverse positions, the cumulative performance of the products may differ from the 2x or -1x of the accumulate index return if those are held for a period greater than one business day. The products may lose money even as the index’s performance remains unchanged over time due to compounding effect from the daily rebalancing trades in product. These products are geared for short-term, tactical investments and should be used accordingly. Investors would be well-advised to familiarise themselves with the features of these products before investing in such strategies.
The Samsung Leveraged & Inverse Investment Product Series (the Product) is only suitable to those investors who are in a financial position to assume the risks involved in futures investments. This information does not constitute an offer or solicitation to anyone in any jurisdiction to buy/sell units in the Product. Futures investments are subject to certain key risks including leverage, counterparty and liquidity risks etc. Movement in the prices of futures may be highly volatile. The Product may not be suitable for all investors. It is possible that the entire value of your investment could be lost. Investors should refer to the Product's Prospectus and other offering documents for further details, including the Product features and risk factors. Investors should not only base on this information alone to make investment decisions. If you are in any doubt about the content of this information, you should consult your stockbroker, bank manager, solicitor, accountant or other financial adviser for independent advice. The information is prepared and issued by Samsung Asset Management (Hong Kong) Ltd (SAMHK’). It is based on data from sources which believed to be reliable but there is no guarantee its accuracy or completeness. Neither SAMHKL nor its Staff will be liable for any losses resulting from this information. The Product has been authorized by the Hong Kong Securities & Futures Commission (SFC). However, the authorization does not mean any recommendation or endorsement of the Product. It does not guarantee the commercial merits of the Product and its performance. This information has not been reviewed by the SFC.