A Study On China's Development Of Futures Fund

In the year of 1949, Richard ?D ?Donchian set up a brand-new fund in the American market. This new kind of fund, managed by professional investors, invests into derivative tools such as futures and options. It is thus called futures fund.Since 1980s, thanks to the flourish development of financial futures, the marked progress made in contemporary investment portfolio theory and the impressive advancement in technology, futures fund has thus achieved astonishingly rapid growth, with annual average growth rate stood at 50 percent and employment shot to 2351 in 2000 from a mere 225 in the early 1980s in the case of American futures fund. To date, Futures Fund has become indisputably a vital force in global financial markets. Moreover it also serves as an efficient means for individuals to participate indirectly in the futures market, reaping higher yields as well as hedging risks.With both the features of futures and that of normal funds, futures fund understandably is influenced not only by futures market but also by security market. It invests into futures market while established in the form of funds in security market. As such, situations in both markets have direct effect on successful establishment and healthy development of futures fund. The risks and yields in both markets also find their expressions directly in futures fund.This paper pulls together existing theories and empirical evidences to assess the development of China's futures fund. First, a basic introduction to futures fund, whereby its characteristics and operation modes have been discussed and its mean-variance analyzed. Second, this paper looks into the historical development of the U.S. futures fund as well as its status quo, comparing with that of other countries and regions. Then, based on the historical development of China's futures market and the status quo, this paper examines its pitfalls and weaknesses, seeks explanations and purports out relevant responding strategies. Finally, with feasibility study of China's futures fund which is key to the improvement of China's future market, the paper explores the possibility of establishing China's own futures fund, its development timetables as well as necessary supporting measures.