An Analysis Of Value Hedge And Increment Of Social Security Fund

The paper is mainly to study the theories and practices of how to keep the value and increment of social security fund in our country. First, the paper analyzes the reality of the problem how to keep the value and increment of social security fund and draws research topic. Second, the paper demonstrates the leading literature and theory on the problem how to keep the value and increment of social security fund domestic and foreign and establishes the base of the research. Through analyzing the raise, investment management and relegation management of social security fund the paper concludes international experiences on this problem.As far as raise model, there are three trends as follow: from cash income and cash pay systen to fund accumulate system, from social plan as a whole to individual account, and establishing several arrangements to raise fund. As far as investment management, security requirement is very important.With the approach of an aged society and payment pressure increasing, many countries try to extend social security fund investment channel and lift the proportion invested in capital market.As the improvement of financial market, more and more financial investment tools are created and financial derivatives come into being, investment models have been diversified.Each government has set up special institutions to manage social security fund and divided the work clearly during the delegation management. The paper analyzes the problem of how to keep the value and increment of social security fund detailed. With the rapid developing of our country, inflation happens continuously so it is hard for social security fund to keep its keep value and increment through deposited in bank. Though national debt interest rate is little higher than bank interest rate, investing national debt can't keep the value of social security effectively either on the condition of climbing inflation.Social security fund started to invest stock market indirectly in the second half of 2003. From the portfolio, diverse investment strategy, safety requirement, focus on operation achievement and liquidity risk are the most important characteristics.From the actual performance, investment managers have acquired average income over market level through active management. But as far as absolute income is concerned, social security fund can't keep its value through investing stocks because the income rate is too low.Social security fund has acquired better achievement through investing convertible corporate debenture. But the investing scale is too small to fit so large social security fund investing demand. Compared risk and income of investing fund, open-fund will be one of the most important investing tools in the future because open fund is traded in net asset with little liquidity risk.Compared with foreign countries, the capital market of our country is special. Since there are so many problems with the security market, such as too much emphasis on the raising money function; stock rights divided, serious absence of corporate governance with listed corporations; incomplete supervision system and so on, social security fund in our country burns more risk than foreign countries.To insure investment security, we have to evaluate the risk of investing stocks directly through qualitative analysis and quantitative analysis.This paper still discusses how to manage investing risk using VAR. In order to decrease risk we can establish risk reserves, provide minimum rate of return guarantees, use all kinds of financial derivatives, intensify information disclosure system. To maximize the achievements of social security fund, we have to extend its investing channels. Meanwhile, we can improve the investing achievement by taking advantage of financial tools innovation.This paper analyzes the possibility and advantage of index investment, especially ETFs. At the same time the paper discusses trust tools, residential mortgage assets, foundation construction and financial tools in foreign capital market. The paper suggests using asset portfolio theory in asset assignment and using loss probability to improve social security fund investment model.Finally, we discuss how to set up macro monitor system and correlative infrastructures construction. The infrastructures construction includes enacting relative laws, training professionals quickly, establishing more lawyer office, accountant office, auditor office, asset evaluation institution, credit rating evaluation institution and investment consultation institution. This paper does active research from three ways. Firstly, we concluded the international experiences of how to keep value and increment of social security fund. Secondly, we discussed the reality of how to keep value and increment of social security fund in our country detailed. Thirdly, we do some elementary research on social security fund investment model using asset portfolio theory and loss possibility.In conclusion, the knowledge and research on how to keep value and increment of social security fund will develop with economy and financial surrounding's developing.