SOME Hong Kong fund management companies are packaging derivatives into funds for the retail investor.
Derivatives are a financial instrument valued according to the expected price movements of an underlying asset.
Futures, warrants, options and swaps are just some of the types of derivative products.
Hong Kong investors mainly limit themselves to warrant funds, which have equities as their underlying asset, as opposed to currencies or commodities.
A warrant or an option is a financial instrument that allows the holder to convert the instrument into shares of a company at a particular time and a price.
They are geared, which means that, as the price of the stock goes up, the price of the warrant will go up in multiples.
Warrant mutual funds could produce spectacular returns.
