You have heard by now how oil prices went negative last week.
What you may not have heard is this retail product that a major Chinese Bank dubbed "Yuan You Bao, or Crude Oil Treasure”. There is a Bloomberg writeup on it.
Essentially this Crude Oil Treasure is one of the small number of players caught in the negative price spiral. Best of all, those retail investors have now been told that they may need to top up their investment to make good the losses! These investors probably thought they were only buying exposure to cheap oil prices! Collectively they lost about US$85m.
I get quite worked up when I read about retail investors who get into products they don't fully understand, simply because it provided a "POTENTIALLY HIGHER RETURN" than normal bank deposits.
This was prevalent in the run up to the GFC, after the GFC and now still ongoing in various forms!
Do you understand what a perpetual preference share is? Do you understand what is a knock in and knock out?
If you don't, just stick to a plain vanilla fixed deposit. If you don't understand what you are investing in, don't!
Hope I am not overstepping my boundaries, but please be careful, never invest in anything you don't understand.
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