Research On Investment Portfolio Of Fund Based On Free Cash Flow

As a kind of collective investment method,securities investment funds apply professional management and standard operation to indirectly expand capital capacity of the Chinese securities market,promote the innovation of financial products,improve the structure of investors,increase the market efficiency and accelerate the development of the securities market.In the case of asymmetric information,institutional investors will apply decentralized investment to rationally combine numerous investment opportunities found through value investing,maximize the value of the information obtained and increase portfolio returns.Fund managers usually apply positive and negative portfolio management strategies to construct investment portfolios.However,the funds and securities portfolio strategy researched by the paper based on free cash flow focuses on financial statement data of listed companies and evaluates stock value using free cash flow.Since free cash flow is earnings that truly belong to stockholders,it represents sustainable operation ability of listed companies and reflects business performance and future development trend of listed companies.Compared with traditional fund investment portfolio strategies,the data needed by free cash flow strategy mainly come from financial statements made by listed companies.The simple and direct calculation process applies relatively few estimated values,thus,it is easy to operate.Besides,the judgment is mainly based on objective data,which reduces errors caused by subjective judgment.In addition,the paper analyzes and predicts securities value and development trend of the company from the perspective of financial statement and improves the fund investment portfolio strategy system,which helps administrative staff to analyze securities value and construct portfolios from various angles.Based on the above background,the paper mainly studies the following two problems:(1)How to construct fund securities investment portfolios based on free cash flow?(2)Does portfolio strategy based on free cash flow has superiority in constructing fund securities investment portfolios?This paper selects the annual reports of listed company data and build composite by using the model.It comes to a conclusion by comparing the yield.The last,using the Sharpe ratio and Treynor ratio and Jason ratio verify the conclusion.As indicated by theoretical analysis and empirical study,portfolio strategy based on free cash flow has superiority in constructing fund securities investment portfolios.Many problems remain to be solved when it comes to the development prospect of the fund industry and the securities market.Therefore,on the basis of research,the paper comes up with the following policy suggestions.First of all,establish and complete the market structure.China should develop the securities market,establish multi-layered national and regional securities markets and introduce trading arrangements suitable for institutional investors.Secondly,accelerate the construction of listed companies and improve the information disclosure system.The operating conditions of a listed company determine the value of its financial assets like stocks,bonds etc.,thus,China should improve the management quality of listed companies and strengthen supervision of the investors and supervisory authorities on listed companies.Thirdly,strengthen supervision on securities fund investment behaviors.On the one hand,fund companies should improve their governance structure and standardize their internal control system.On the other hand,supervisory authorities are supposed to enhance real-time monitoring of the investment behavior of each fund company.