How to as­sess the risk

Money Magazine Australia - - SHARES - Source: moneys­

If you are con­sid­er­ing hy­brids as an in­vest­ment, find out the an­swers to these ques­tions from your fi­nan­cial ad­viser or the prospec­tus, ad­vises ASIC.

What are the risks of in­vest­ing in this hy­brid se­cu­rity, now and in the fu­ture?

Will the re­turns of­fered ad­e­quately com­pen­sate for the in­vest­ment risk?

How does the in­ter­est rate com­pare with other in­vest­ments on a “riskad­justed” ba­sis? Can other less com­plex, less risky or long-term in­vest­ments pro­vide a sim­i­lar or bet­ter re­turn?

Does the is­suer have to pay in­ter­est? If they don’t, do missed pay­ments ac­cu­mu­late?

What is the ma­tu­rity date? Can the is­suer re­pay the in­vest­ment early, or leave the hy­brid on is­sue for a very long time?

Are there any trig­ger events (such as “loss ab­sorp­tion” or “non­vi­a­bil­ity”) where your hy­brid may con­vert into or­di­nary shares, or be writ­ten off com­pletely?

Will this prod­uct help you achieve your per­sonal goals? Does it suit your in­vest­ment time frame and per­sonal risk profile?

Can you exit this in­vest­ment if your cir­cum­stances change?

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