RISK OF LEVERAGED AND INVERSE PRODUCTS (L&I Products). I nvestment involves risks. The risks of investing in different L&I Products vary due to the difference in product structure, investors are highly recommended to read the prospectus and key facts sheet carefully in order to understand the risks involved in a specific L&I Product.
14.1 Investment risk The L&I Product is a derivative product and is not suitable for all investors. There is no guarantee of the repayment of principal. Therefore your investment in the L&I Product may suffer substantial/total losses.
14.2 Long term holding risk The L&I Product is not intended for holding longer than one day as the performance of the L&I Product over a period longer than one day will very likely differ in amount and possibly direction from the leveraged performance of the index over that same period. The effect of compounding becomes more pronounced on the L&I Product’s performance as the index experiences volatility. With higher index volatility, the deviation of the L&I Product’s performance from the leveraged performance of the index will increase, and the performance of the L&I Product will generally be adversely affected. As a result of daily rebalancing, the index’s volatility and the effects of compounding of each day’s return over time, it is even possible that the L&I Product will lose money over time while the index’s performance increases or is flat.
