Different investment funds carry different risks. It is crucial to understand the specific terms and risk mentioned in the offering documents/ prospectus and other relevant documents before investing. Key risks but are not limited to:
An issuer falls to make principal and interest payments when due. Such a risk usually applies to all fixed income and money market instruments.
Market Risk & Interest Rate Risk
The value of investments may go up and down due to changing political, legal, economic conditions and change in interest rate. This is common to all markets and asset classes. Investors may get back an a amount substantially less than intially invested.
Currency Risk & / Renminbi (“RMB”) Currency Risk (if applicable)
Exchange rate fluctuation may affect the value of a fund, and the dividends and interest earned by a fund. For products, including Principal Protected denominated in a foreign currency, there may be an exchange loss when converting the redemption amount back to the local or base currency.RMB exchange rate, like any other currency, is affected by a wide range of factors and is subject to fluctuations. Such fluctuations may result in gains and losses in the event that the customer subsequently converts RMB to another currency (including Hong Kong dollars); and RMB is currently not freely convertible and conversion of RMB through banks in Hong Kong is subject to restrictions specified by the Bank and regulatory requirements applicable from time to time. The actual conversion arrangement will depend on the restrictions prevailing at the relevant time.
Exists when a particular instrument is difficult to purchase or sell. Securities not listed or rated may take longer to dispose of in the market resulting in a higher liquidity risk. With these risks, investors may incur significant costs or losses.
Exists when derivative instruments are used for hedging, efficient portfolio management or leverage purposes which may involve additional risks such as volatility risk and counterparty risk. In adverse situations, the investment may be exposed to significant losses.
The investment may have credit exposure to counterparties by virtual of positions in derivative instruments as well as certain other securities that may be held by the investment. To the extent that a counterparty defaults on its obligation and the investment is delayed or prevented from exercising its rights with respect to the investments in its portfolio, it may experience a decline in the value of its position, lose income and incur costs associated with asserting its right.