Study On The Market Risk Management Of China's Open-end Fund

Open-end funds as a form of indirect investment tool, on the one hand, their rise and development is the result of financial innovation for the stability of stock markets has played a certain role. On the other hand, due to open-end fund in China are still relatively new financial products, if the Fund's risk management is imperfect, but will bring new risks sources, to the stock market and investor losses. Therefore, the good or bad management of open-end fund risk not only affect the fund's performance, affecting the interests of fund holders, but also affect the operation of the financial system.In this paper, for China's open-end fund's market risk management study, from the risk management and open-end fund's basic theory, leads to our open-end fund risks and risk management status, describes the major international risk measurement methods GARCH model and VaR model, in the meanwhile, analyses the co-integration analysis of open-end fund and securities markets.Market risk is the biggest open-end fund risk. To enhance the management of market risk has increasingly become the core work in investment funds. Value at risk model was developed in recent years for measuring and controlling financial risk is a method using statistical methods to valuate financial risk.VaR risk measurement method was first used by J. P. Morgan bank for the lack of previous market risk measurement techniques proposed, the model has been made regarding their accuracy, scientific, practical and comprehensive features on the market risk measurement have been welcomed by the financial world. VaR Method and ARCH-GARCH model combination is the mainstream method of financial markets risk measurement. After analysis, the VaR method which based on GARCH model on China's open-end fund market risk is valid; it can measure risk and also provide predictive functionality. Finally, as open-end fund market risk is difficult to eliminate by using an effective way, so, this paper uses the VaR risk management techniques to study open-end fund market risk, to open up a new road for the management and prevention of market risk.