A Discussion On Some Issues Of Private Investment Funds In China

As an investment instrument, investment fund has the distinct advantage of combining capital, financial management expertise, and portfolio investment and risk diversification. In China, as a report by Xiabin, an official of the People's Bank, the private investment fund has reached to about 800 billions RMB which is one half of the current market value in the stock market. But the current private securities fund in the capital market in China is an auto-creation investment tool, which has provided additional investment opportunity for public in China. However, as the growth of the private investment fund, the accumulated problems are obvious and potential. The funds have not been legally approved by the government, and they have added some potential risk into the market due to their fast expansion without necessary administration and supervision.As to the fast growth in scale and influence from the private investment funds, they have affected the market sometimes more than the legal investment funds. This paper studies and compares the characteristics of the private investment funds and legal investment funds, and points that the appearance of private investment funds is associated with the defecting system of the stock market. The author argued that the appearance of the private funds partially is natural and reasonable, but also out of order and conflict due to their irregular operation in the market. This paper contains three chapters:Chapter One reviews the private investment fund. It first reviews the history and status of the private investment funds abroad and then summarizes some lesson worthy to China. The author also analyzes and compares the characteristics of the two types of the funds.Chapter Two discusses the practice of the securities investment funds in China,including its implications, current status and problems.Chapter Three proposes some suggestions for reforming and managing the private investment funds in China. The author emphasizes that the private investment fund is feasible to the market development, however, the funds must be legally regulated and managed.