Dr Larry Haverkamp wrote an article in Business Times. He said:
- many people are trading a lot of money in structured warrants
- last month the amount was $1 billion, representing 20 per cent of the stock exchange’s total trading volume
- structured warrants are a "zero-sum" game; for every $1 million won by some people, others will lose $1 million.
Dr Haverkamp also told me separately:
- the structured warrants are created by the issuing banks
- they set its price at issuance
- issuing banks are also the market-makers
- they do not reveal how much they charge for issuing the warrants OR for market-making
I have never invested in structured warrants, structured deposits and other complicated products. Without full disclosure of their costs, I prefer to avoid them.
I favour to invest in unit trusts that offer low charges. The investments are likely to earn an average of 5% to 8% per annum over the future. If the charges are less than 1%, I will be able to keep most of the profit for myself.
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