A Research On The Redemption Of Chinese Open-ended Fund

Although open-ended funds don't have a long history in China, but they have already confronted large-scale redemption. Based on the formation mechanism, this essay fingers out that the system of free redemption of open-ended funds results in the inevitable liquidity risk of open-ended funds. And also, two factors influence liquidity risk of open-ended funds: One is the time and scale of investors' redemption. The other is the liquidity of fund portfolio. Moreover, investors' behavior of purchase and redemption, especially redemption, would impact on the fund's cash flow, then fund managers must adjust fund portfolio according to the changes of cash flow. Finally, investors' behavior of redemption will influence the liquidity of fund portfolio. Based on the analysis above, we can say that investors' behavior of redemption mainly leads to the liquidity risk of open-ended fund. In the next part, the essay studies on Chinese investors' behavior of redemption with empirical method. Elements of influencing redemption rate are redemption rate of last period, the funds' dividend policy, the amount of fund and stock market trend, while the profit achievement of funds does not affect redemption rate, the reasons of which are the immaturity of Chinese investors' investment concept, the lack of financial products and the imperfect trading system of stock market. Aiming at the problems reflected by former analysis, the essay proposes scheme and system on management of liquidity risk of open-ended funds in China.Structurally, this paper is divided into six parts. The first part is the summary of the redemption of the risk of domestic and foreign research literature. In the second part, we discuss the formation mechanism of the open-ended fund liquidity risk, and demonstrate that the main reason of liquidity risk is the redemption of investors. The third part is the analysis of investors' motive factors and the factors that influent redemption. In the forth part, we use statistical and descriptive methods to analyze Chinese fund investors' redeemed acts and the impact of Chinese redemption of all of the empirical analysis of factors. The fifth part are the several current control measures of liquidity risk. In the last part, we propose some suggestions against open-ended fund liquidity risk.