| This thesis gives a view of private funds and explores their advantages through an analysis of their internal structure and operating mechanism. Then the economic effect of private funds and their risks management are discussed. At the end of this thesis, some specific policy and suggestions to construct private funds system in China are put forward with a view to standardize their development.The first chapter mainly illustrates the definition and characteristics of private funds. Private funds, which haven't been under control of China's current laws and regulations, are newly emerging things in China's stock market. Borrowed from foreign definitions, a private fund, usually a "closed-end" fund, is set up among a group of people, each contributing a significant amount of money and investing into a particular class of assets.The advantages of private funds are that professional managers can use their specialized knowledge of the selected asset class to obtain higher returns than can be expected from public funds, which are mostly listed, usually open-ended and constrained by strict regulations. Private funds are set up among certain groups of people, whose particular investment demand can be met in the fund contract. Based on these advantages, private funds have experienced such a rapid development that their volume has reached 700 billion RMB within only several years.The second chapter discusses the current situation of private funds in China and their development prospects. Private funds have generated spontaneously in China's securities market and been regulated by market rules; therefore, they have met the market demand and have been developing rapidly since they first emerged. Private funds are bound to have a bright future in China.The third chapter first describes the operating mechanism of private funds, then focuses on practical methods to control the risks involved. Comparatively speaking, China's private funds don't have as many investment tools as their foreign counterparts and they mainly operate in the secondary stock market. As a result, the risks private funds confront are tremendous: private funds in China have no legal status, which indicates that the fund contract can't get proper legal protection; the stock market has been far from perfect so that private funds have inadequate instruments to avoid risks; the listed companies participating in private funds are vulnerable to risks; private funds investors also confront the risks of unexpected policy change. To provide private funds with a more favorable environment, the regulatory department concerned should adapt the successful experiences in other countries to the real situation in our stock market flexibly so as to establish and perfect the relevant laws and regulations. The qualified private funds should be given corresponding legal right and brought into regulatory systems; the natural financing channel should be smoothed and strictly regulated so as to avoid system risks; necessary financial instruments should be introduced into financial market to avoid market risks; investors' sense of risk should be enhanced; the internal control in private funds should be reinforced to cultivate excellent fund managers.The fourth chapter mainly explores both the positive and negative impacts of the private funds on China's economy. As an important investment force, private funds will substantially promote the social productivity force and speed up the reform of productivity relationship. The legalization of private fund will undoubtedly boost China's macro economy and accelerate the restructuring of our economic systems. The securities market can be purified and its efficiency can be improved.At the same time, it should be pointed out that at present time, private funds have not legal status and there are unavoidable problems in their operations: private funds are not qualified to play in stock market and many of their operations are illegal. For example, the fund contract is outside the letter of the law and cannot... |
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