Investors who trade in turbos lose on average both often and a lot of money, the Netherlands Authority for the Financial Markets (AFM) concludes on the basis of its own investigation. Turbos are levy products, whereby investors can make larger profits faster compared to shares, but also greater losses.
Nearly seven in ten investors who traded in turbo products between June 2017 and July 2018 made a loss, AFM reports in the investigation for which 3.9 million orders were viewed. On average, investors lost 2,680 euros when trading in the leveraged product.
With a leveraged product you can respond to a price rise or fall with a relatively small investment. For example, where you can buy a share for 50 euros, you can instead buy a leveraged product such as a turbo (also called a sprinter or speeder, ed.) For 10 euros. The rest is then borrowed from the provider. In this case there would be a lever of five on the product. If a share then becomes worth a euro more, the value of the turbo increases with the leverage of the product.
And so these products are risky, says the AFM. The market authority calls on the turbo industry to take responsibility and reduce the risks for investors.
– .
