Research On The Development Trends And Mode Of Trust Of Trust Fund In China

2007 was known as China's initial year of hedge fund industry development. Equity investment trust plans, as the main form of domestic hedge funds, has developed rapidly in 2010 and entered a rapid development period since then. In year 2010, the size of hedge funds expanded its managing asset 3 times to as large as approximately 160 billion Yuan. As hedge funds in China rapidly expanding, resulting in a significant performance differentiation. In 2009 began a new mode of financial innovation-TOT (trust of trust). TOT is build by the combination of equity investment trust plans to diversify risks while eligible of access to obtain high revenue. This product was a remarkable innovation in pursuit of high net worth individual investors. Currently there is only 30 TOT products in the Chinese money market, approximately in the amount of only 80 billion Yuan, accounting for less than 5%compared to direct investment in hedge funds which expanded rapidly by the growth of domestic high net worth individuals. TOT has great potential of development. But current TOT products on the market have the mechanism to spread risks but lack of gaining relative income. This current products'performance and quality does not meet the growing investment needs for high net worth investors.The significant Purpose of this study is generated by TOT products' developing trend as well as foreign hedge funds of funds (FOFH) development trend, and more in-depth analysis of rapid development caused internal and external issues. This study also revealed aspects of TOT which shown great potentials for development in the future.The main content is about the rapidly expanding scale of private investment caused large performance differences between trust plans which helped the market generating TOT products. Although TOT analysis shown great future potential of development; there are still many problems. This study also discussed problems and resolution, providing TOT's new development model and framework.The main points are the following two points, one discussed great potential for development TOT; Second, by constructing a new model of TOT, solve the internal and external existing problems, and built a complete research system, improve the investment strategy and risk control system:Brokers as investment advisers+commercial and private banks with a strong customer resources, marketing capabilities and quality of services as a marketing channel.By comparing the foreign hedge funds FOHF (fund of hedge funds) development, reveals domestic TOT has great potential for development. This study also raised new development model, by discussing current internal and external problems.Logical structure of the paper is divided into five parts.The first chapter describes the emergence and development process of TOT, explained that the future will be in huge development potential.Chapter II fund of hedge funds from abroad (FOFH) development experience and history of the Enlightenment, that TOT has great potential for development. First two chapters of this study leads to the necessity and importance of TOT products.Chapter III started from existing model of TOT puts forward currently the main problem of TOT is its overall revenue and performance can not meet the needs of high net worth investors. Because of its risk diversification also reduces portfolio income.Chapter IV is the TOT existing internal and external issues study in depth. Study of resolve internal TOT problems, including the mode of investment advisers, trust platform, rates, liquidity analysis of the issues in four areas, indicating that TOT's internal problems is the lack of professional investment consultants to carry out the initiative across the Trust platform management, higher rates, less liquid; TOT external main problems is the issue of systemic risk, including risk of policy, real estate bubble, social purchasing power risk, currency risk.Chapter V presented of constructing a complete research system, including investment strategy and strict risk control system, have brokerage firms serve as investment consultants, private and commercial banks work as marketing channel. This new development model framework resolves the current TOT problems.The main contribution of this paper is mainly reflected in the following aspects, first, discover TOT in huge potential for development; second, the development of a new model framework of TOT product; third, presented the current main problems of TOT is the risk of large diversification in revenue, and discuss how to build a "low risk, high return" TOT to meet the needs of high net worth individuals, to enhance the performance and quality of TOT; fourth established brokerage firms in the position of TOT investment consultant, and commercial and private banks as TOT marketing channels, on the TOT continued development and expansion of the scale is important; Sixth, building TOT risk control system.