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China Open-end Fund Liquidity Risk Research

Posted on:2005-04-30Degree:MasterType:Thesis
Country:ChinaCandidate:J WangFull Text:PDF
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Background and purposeSecurities investment fund is a tool of portfolios by which securities investors share interests and stakes. Compared to close-ended fund, open-ended fund is more advanced. Its operation mechanism can ensure interests of investors and encourage managers to raise the achievement of fund, so it makes headway in the international capital market. According to the investment company institute (ICI ), Mutual fund market's net inflow is 49,780 million dollars in January of 2004 and the whole fund assets increase to 7,540 billion. It creates the new highest record in history. Since the first open-ended fund —Huaan innovation was issued on September 21, 2001 on our security market, the open-ended fund has been increased rapidly. The first issue scale is 11,700 million Yuan in 2001,and 44,800 million Yuan in 2002. 39 open-ended funds were issued in the whole year of 2003 and its first issue scale was 67,845 million Yuan. Open- ended fund has exceeded the close-ended fund in the net value and quantity and become the protagonist of Chinese fund industry.But the open-ended fund faces a series of risks with its rapid development, like business risk, market risk, etc. Liquidity risk will break out with their gather. The liquidity risk is concentrate on all risks in the operation of open-ended fund. Though the open-ended fund of China is new, its liquidity risk can't be ignored. The scale of many open-ended funds decrease constantly since establishing. If things go on like this, the continuation of its development will be influenced. The operation time of open-ended fund of our country is relatively short at present and the securities market is still not perfect, so these factors will bring about liquidity risk. Undoubtedly, liquidity risk of the open-ended fund has influenced the steady and development of fund industry. It is very important to study the liquidity risk of the open-ended fund.Main contents and ideasThe thesis is composed of four parts:Part one mainly discusses the meaning, influence and characteristic of the liquidity risk of the open-ended fund. Firstly, it analyzes the meaning of liquidity risk of open-ended fund. Then it analyzes the influence and characteristic of open-ended fund, there are much similarity between the liquidity risk of open-ended fund and bank run on a bank, but also difference. The liquidity risk of open-ended fund has a unique characteristic. And then we can draw a conclusion through comparing the liquidity risk of open-ended fund with that of close-ended fund: The liquidity risk of open-ended fund is larger than that of close-ended fund because of the operating mechanism of the open-ended fund.Part two analyzes the liquidity risk of the open-ended fund about redemption. The thesis analyzes the redeeming mechanism of open-ended fund by Principal-Agent Theory. The open-ended fund offers more and accurate message than close-ended fund because of its redeeming mechanism, thus it is favorable to the investors and closer to " the state of balance ". But it strengthens the liquidity risk of open-ended fund at the same time. Then the thesis analyzes the redeeming situation of 17 open-ended funds from type of the fund, issuing date, first issue scale, the state of investors and the achievement of fund. We can see that many factors will influence the redemption. The investors of the open-ended fund are highly centralized in our country, and this will strengthen the liquidity risk to a great extent. And then the thesis analyzes the liquidity risk about redemption from the disclosure of information and sincerity of the open-ended fund of our country. Part three analyzes the liquidity risk of open-ended fund about assets. The thesis is come to consider from capital market and fund management company. Capital market is mainly explained including present state of development and mobility of stock market. The liquidity risk of open-ended fund about assets is very large because of the characteristic of our capital market, the limitation of depth and sco...
Keywords/Search Tags:open-ended fund, liquidity, risk
PDF Full Text Request
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