The Unlisted Securities Exchange (USX) offers investors a unique opportunity to invest in the shares of a variety of growth companies. While investing in any shares can be lucrative, it also carries significant risks. In this article, we will explore the opportunities and risks of investing in shares listed on the USX.
Opportunities
One of the primary benefits of investing in shares quoted on the USX is the potential for higher returns. Since these shares are not as sought after by investors, they can be undervalued, and investors can purchase them at a price below true value.
Investing in USX listed shares also provides investors with the opportunity to support small and growing businesses. These companies are likely to have raised capital via non-traditional means such as crowd funding. By investing in their shares, investors can support these companies as they grow and potentially profit from their success.
The USX also allows investors to diversify their portfolios and manage risk by investing in shares with varying levels of risk and return.
USX listed companies also provide more disclosure than some other investment options including the need for audited accounts. By providing investors with more information about the company, including its financials and management team, investors can make more informed investment decisions and feel more comfortable about the investment. With all the necessary information disclosed, investors can assess the risks and opportunities and make investment decisions that suit their financial goals and risk tolerance.
Risks
Despite the potential for higher returns, investing in shares listed on the USX carries risks. These shares may have lower levels of liquidity so there may not be the depth of buyers.
Furthermore, investing in such shares requires a higher level of enquiry to understand the business. Investors must conduct their own review of the company’s financials, management team, and business plan to determine if the investment is worth the risk. This can be time-consuming and requires a certain level of financial expertise.
In addition to the opportunities and risks discussed, investing in shares listed on the USX also offers the benefit of having your broker attend to clearing and settlement. This reduces the risk for investors that the buyer will not have the shares transferred to their name and the seller will not receive the proceeds of their sale.
Investing in shares listed on the USX can provide a good opportunity for investors looking to diversify their portfolios and support small businesses. However, it is crucial to recognize the risks involved and conduct your own review before making any investment decisions. Investors should also be prepared to accept potentially lower liquidity. By understanding these risks and opportunities, investors can make informed investment decisions and potentially profit from investing in shares listed on the USX.