The China Index Fund Needs Analysis And Investment Performance Management Research

Index funds first appeared in the 1970's in U.S.A. Index funds attract many investors and develop rapidly in recent years for their good performance. It is summarized that there are 113 index funds based on S&P 500, total assets amount to 1 trillion, of which Vanguard S&P 500 Index Fund ranks first according to its net assets by the end of Year 2000. Three index funds were issued in later half year of 1999 on the base of China macroeconomics?rapid development and the need of development of institutional investors. In order to suit china security market (high systemic risk and high firm-specific risk), The index funds are designed optimized index funds: 50% percent assets are passively invested, 30% percent assets are actively managed, 20 percent assets are invested in public treasury bills and bonds. But the empirical results of the thesis show that optimized index funds are not optimized, and the gap between the performance of optimized index funds and that of actively managed funds is moderate. The thesis discusses the advantages of index funds and their huge need in china, reveals the poor performance of optimized index funds by using risk-adjusted performance appraisal methods, analyzes the causes and provides the feasible and practicable solutions.