Research On The Risk Of Money Market Fund In China

The market and the internet are filled with a lot of wealth management products such as stock,trust,funds,P2P,precious metals,real estate and alternative investment where good and bad are intermingled.However,the ordinary investors can't identify the risk because of the lack of corresponding financial knowledge and are easy to be blinded by the temporary interests.Although some products can give you the interests beyond the market average,but you may lost your capital sum entirely.So it's necessary to strengthen the financial management knowledge for our residents and introduce them some excellent wealth management products.Therefore this paper will introduce and analyze the Money Market Fund(MMF)which are simple and convenience for the common investors and low risk investors.This paper mainly analyzes the risk of the money market fund.Firstly,this paper introduced the background and the significance of this topic and gave a generalization to the former scholars' researches.The former scholars studied the money market fund from the aspect of yield at the beginning.For example,the interests effects to the money market fund and how the prediction of the fund managers about the interests direction influenced the rate of return in money market funds.Then Chinese and overseas scholars made some qualitative analysis to the risk of the money market funds and concluded it with several points such as asset portfolio risk,moral hazard and liquidity risk.And some of the scholars also used the econometric models that used for reference from the capital market to quantize the risk of the money market funds.And then this paper introduced the origin and the development of the MMF.We will dig into it from aboard because it was originated from the United States.It can be retrospected from the 1970's where the United States's economic environment characterized by "Stagflation".None other than the special historical time gave birth to the MMF.Then China set up its first MMF in 2013 but developed slowly.Until the catfish Yu Ebao who want to break the monopoly of bank have listed in the Ali platform,our country's MMF scale surged with the help of the Internet Finance.As of July 2017,the balance of the net asset of Yu Ebao has exceeded the personal balance of China Merchants Bank.Therefore you can see the rapid growth of our MMF and it's imperative for us to analyze the factors affected the yield and risk of MMF in our country.People always focus on the yield but neglect the risk.As the scale of the MMF expanded the risk can be accumulated.So this paper also gave a qualitative analysis to the yield and risk of the MMF.In general,the returns of the MMF can be influenced by the factors such as market interest rates,short-term money market situation,bond market and equity market.They may have a positive or negative correlation to the benefit.Further,the paper also gave the possible risk factors such as liquidity,valuation,operational,regulatory and quantitative easing.The key sections mainly made an empirical analysis of the MMF using the econometric model.Selected five representative MMFs for instance TIANHONG YUEBAO,YIFANGDAYILICAI,HUAXIACAIFUBAO,NANFANGXIANJINTONG,HUITIANFUQUANEBAO and used the ARCH model to calculate their VaR(Value at Risk)and gave them Kupeic BackTesting.Taken together,HUITIANFU QUANEBAO and HUAXIA CAIWUBAO behaved more profitable and less risky compared to other three selected money market funds based on the outcome.TIANHONG YUEBAO,NANFANG XIANJINRONG have been calculated at a high VaR value which means their risk were much higher than the others.Our common investors should be cautious.At the end,the paper put forward some suggestions on how to prevent the risk of MMF in China from the point of fund companies,Asset Management Association of China(AMAC)and China Securities Regulatory Commission(CSRC)etc.