Warrants cover a wide spectrum of risk and return profiles, and investment objectives. In broad terms, warrants can be viewed as 'trading-style' products or 'investment-style' products. Some may fall into both categories.
Investment-style warrants | Trading-style warrants |
Instalments | Trading warrants |
Endowments | Knock-out warrants |
Structured investment products | |
Non-leveraged gold warrant (PMG) | |
Investment-style warrants
These products tend to be longer dated and less frequently traded. They have a lower risk/return profile and often have a higher face value than trading-style warrants.
Investors in investment products may be looking for long-term leveraged exposure to the underlying instrument. They may also be attracted to other features of some investment-style warrants, such as an entitlement to dividends, or a capital guarantee on the initial investment.
Trading-style warrants
These products are relatively short-dated and are generally traded frequently. They have a higher risk/return profile than investment-style warrants.
Investors in trading products may be looking for short-term leveraged exposure to the underlying instrument. The investor may have no intention of ever trading the underlying instrument, but may be looking to profit from short term movements in the value of the instrument.
For further information please visit the Warrants section on the ASX website.