Risk Management Of Institutional Investors Based On Risk Budgeting

Generally speaking institutional investors are more inclined to value investment and long-term investment. So they are the stable factor of our market. A market formed by different investors restricting each other is more prosperous. In order to maintain the sound development of our stock market, the government has set to improving the internal structure of the market and getting the cultivation of the institutional investors. In this kind of background, the quantity and the internal structure of the institutional investors in the market have changed greatly. The main investors in the market have changed from individual investors to institutional investors and in the meantime the market has entered an era of 'Value Investment'. The market environment and profit mode the institutional investors survived have changed fundamentally. But compared with the ripe markets of foreign countries, the risk management of the institutional investors of our country who only paid high attention to profit and neglected risk is still in a very low level. The lasting drop of the security market of our country and the centralized release of risk in recent years have put forward a new requirement for the risk management of institutional investors. How to adapt to the changed market environment is an urgent problem to be solved in front of the institutional investors. This paper analyzed from the new characteristic of the risk management of the institutional investors in order to apply the risk budgeting which is an advanced risk management method to our risk management practice. And the paper also talked about the special environment the risk budgeting applied in our country and the difficulty that the institutional investors should pay attention to.