Private Securities Investment Funds In China's Development Mode Selection

Private-placement securities investment fund is the inevitable product with the development of society and economy. In foreign developed countries, the private-placement securities investment fund, represented by the hedge fund, has become more and more mature in recent years. Besides the public-offered fund, which is focused on different type of investors, the private-placement securities investment fund has also developed as the main force in the securities market.In China, the private-placement securities investment funds have not been maturely developed with illegal status, and thus most of present private-placement securities investment funds could only be operated secretly in multiple kinds of forms. What's more, the operational mode of China's private-placement securities investment funds has not been standardized, and the lack of investment instruments also severely hinders the development of private-placement securities investment funds. Thereby, it is of vital importance for us to make a judgment for the present private-placement securities investment funds in China, and raise relevant suggestions for its proper development modes.This article firstly defines and analyses the properties and basic characteristics of private-placement securities investment funds, and evaluates the present situation of the private-placement securities investment fund's development in China by comparing with U.S., H.K., and then points out the existed problems. Based on the above analysis, the paper makes efforts to pin down the proper choice for the development of private-placement securities investment funds in China, and at last puts forward comprehensive suggestions from three aspects: advancing the legalization of private-placement securities investment funds, accelerating the construction of institutional regime, as well as improving the external environment for private-placement securities investment funds.We need to point out the two important conclusions of this research: firstly this paper has found out the three core elements for the development of private-placement securities investment funds: organizational modes, profit-distribution system and government regulation; secondly, based on the principal-agent relations between managers and investors, this paper introduces the Principal-agent Model, and establishes the utility functions for each playing part. The ultimate research reveals that the framework of limited partnership and profit-sharing systems could cover the difference of bilateral parts to ultimate extent, and could also provide effect restriction and stimulation to fund managers. As a result, the framework of limited partnership and profit-sharing systems might be the optimal choice for the development of China's private funds.