A Research On Risk Management Of China's Open-End Funds

Open-end funds is a revenue and risk sharing instruments of pool investment, it is an important part of innovation. Open-end funds have more advantages than closed-end funds and it is the main development direction in each country. As a higher degree of market financial products, the introduction of open-end funds will help enhance the market breadth and width of China's securities. However, due to the development time is short and fast, open-end funds itself with the risk of potential will become the main obstacles of flourish development in China. How to effectively control the risks of open-end funds become the common concern issues for regulators, fund management companies and investors.This paper start with the status quo about risk and risk management of China's fund industry faced, with the use of a combination of methods of qualitative and quantitative, it analysis the major risks which the rapid development of the domestic open-end funds were faced. According to the basic methods and procedures for risk management, first of all, it introduces the major types of risk on China's open-end funds and the cause of the inherent links, it descriptions the important significance on the risk management of open-end funds; Secondly, through the use of recent data and VaR models, this paper focuses on the assessment and management of market risk, liquidity risk, internal control risk and operational risk and do some empirical analysis on China's open-end funds' market risk, with the considerations of model risk, analysis the applicability of the variance -covariance method in China's open-end fund market risk assessment; Finally, through analysis, we can make from abroad where has developed a number of open-end funds, with the status quo of China's capital market and the particularity of open-end funds, establishment of an open-end funds risk management framework, which is suitable for China's national conditions.