Main risks

Information

Market Risk
Investors have no risk in individual stocks (Alpha) but still have to assume market risk (Beta).
Tracking Error
It is impossible for ETF to fully replicate or track the indexes.
Liquidity Risk
The method of ETF trade is the same as stock trade. Whenever there is a significant event in the market, investors maybe be unable to subscribe or sell, which constitutes liquidity risk.
Exchange Risk
If the underlying currency of ETF revaluates against NTD, investors will experience exchange gain. If the reverse is true, investors will suffer exchange loss. For example, if the underlying currency for a specific ETF is USD and the exchange rate between NTD to USD devaluates from 30:1 to 34:1, the investors will have exchange gain and vice versa.

Except the primary risk above, there may also have return risk, early redemption risk, credit risk, event risk, country risk and settlement risk.

Capital Gains
Capital gain is the principal source of income for ETF. Since ETF invests in different types of stocks, it may earn a spread from buying low and selling high.
Dividend Income
ETF tracks specific indexes as its investment objective, whenever the component stocks pay out dividends, investors are entitled to the corresponding dividend income net of management fee and applicable taxes.
Exchange Gain
Investing in ETF in foreign currencies denomination, investors may enjoy exchange gain at redemption of the instrument when NTD revaluates against the underlying currency at the time of redemption.

Major differences between ETF and Unit Trusts (mutual funds)

Super Yield Investments are a form of structured product and are different from the traditional forms of time deposit. Therefore, it is not a substitute for regular time deposits and is not inclusive in the extent the Central Deposit Insurance Corporation (CDIC). Investors shall assume the credit risk of HSBC as their own responsibility.
Investment entails risk. Return of investment is determined by market situation within the term of investment or the expected time span. The underlying performance in such period may be positive or negative, which in turn will affect the return. The return of this product may fall lower than the return of time deposits covering the same period. Investors shall prepare to assume risk, and may not earn the same interest as investments otherwise with the same principal. Investors shall make independent judgment on participation in any of the investment programs cautiously with reference to their own capacity in assuming risks, investment experience, investment objectives, financial positions and related conditions (effect on legal, taxation and accounting aspects).