The Study Of Explicit Incentive Mechanism In Chinese Security Funds

As an instrument of congregate Investment and specialized financing , mutual fund actually represents the relationship of principal-agent. The principal (the investor) and the attourrey (the fund manager)have different objectives when they coperate. They share asymmetric of which the principal takes a disadvantage. To the aim of protect effectively the investors interest, fund managers incentive-bond mechanism thus becomes an important factor in stipulating investment fund system. However, so far, China' s fund industry is still at its primary stage and we are far from being able to establish a well-formulated incentive-bond mechanism that could effectively protect the investors interest during the actual practice of fund management. Therefore, to establish such a mechanism of fund manager explicit incentive seems more important at this primary stage.Firstly, knowing well of the development of the mutual fund of China and America as well as evaluating it fairly and objectively. On this base, a definition is given to explicit incentive mechanism so that from the point of policymaking, payment and overhead expanses, we can see a clear distinction the mechanism of these two countries with different economic system and environment.Secondly , finding the problems of Incentive Mechanism in China Security funds through the reality. And try to find some ways to solve these problems. And set up reputation mechanism to make up the explicit incentive mechanism.Lastly, their deficiencies are concluded and the corresponding measures are put forward.