Research Of The Liquidity Risk Of Chinese Open-end Fund

Compared with closed-end fund, the most dominant advantage of open-end fund is that investors can purchase and redeem their fund shares constantly on the base of their judgments, which greatly welcomed by investors.The open operation model of open-end fund, however, also made the world open-end fund managers have to face an inevitable and difficult problem, which is the liquidity risk of open-end fund. When large redemption or even gigantic redemption happens, fund managers will have to sell part of their securities portfolio in a lower price, which will cause substantial loss of open-end fund. Therefore, the liquidity of open-end fund damages the stable operation. Especially, due to considering imperfect of Chinese capital market, immaturity of investment mind and low fund management, Chinese open-end fund will have to face higher liquidity risk.This paper aims to study the liquidity risk of Chinese open-end fund by empirical means on the base of Chinese practice and foreign successful risk management experience.The whole paper will be arranged as following: firstly, I will make a brief introduction for liquidity risk of open-end fund and put forward the object and method I want to study. Secondly, I will introduce the related studies on liquidity risk of measurement in literature review. Then I will stress to study the liquidity risk of Chinese open-end fund by empirical way. This part will be divided into two smaller parts. The former will qualitatively analyze the reasons of liquidity risk of Chinese open-end fund and influential factors. The later will quantitatively analyze the liquidity risk of Chinese open-end fund. The quantitative part also includes two parts. One part will study liquidity of portfolio and analyze the intrinsic liquidity pressure. The other part will be the analysis of correlation with the liquidity risk and the part reasons of liquidity risk. According to the research result, I will put forward relevant proposals to reduce liquidity risk of Chinese open-end fund. Lastly, I will make summary and expectation for this paper.