Optimization Analysis Of Long Term Equity Investment Strategy Of Insurance Funds In China

In recent years,with the rapid growth of the asset China’s insurance industry and the gradual release of regulatory policies for the funds utilization,the balance of the use of insurance funds in China is also increasing.Due to the increasingly fierce competition in the insurance industry and the annual loss of underwriting profits,the reasonable and effective use of insurance funds and the increase of investment income of insurance funds have become an important direction for the development of insurance companies.However,the investment structure of insurance funds in our country is unbalanced and the proportion of fixed income products remains high,and the proportion of investment in equity assets,such as equity investment has been too low,which has led to a long-term low and high volatility of insurance fund investment yield.Long-term equity investment,with high and stable yield,matching with the duration of insurance funds,can become an important channel for the allocation of insurance funds.Therefore,how to determine the optimal proportion of equity investment,how to choose the optimal portfolio of equity investment,is the top priority of entire insurance industry to increase investment returns and competitiveness.In order to conduct an empirical study on the optimal proportion of China’s insurance funds equity investment,this paper builds the Markowitz portfolio of insurance funds invested in various types of assets,and selects the rate of return on various types of assets,such as bank deposits,equity investments,government bonds,corporate bonds,financial bonds,and other funds from 2006 to 2016,and measures the optimal investment ratio of the various types of assets with the smallest difference below the level of different returns,and determines the theoretical optimal investment portfolio by calculating the highest risk-to-compensation ratio.Compared with actual various assets investment ratio,the results of the study found that China’s insurance funds currently have a relatively low proportion of investment in equity assets represented by equity investment,and the optimal investment ratio of equity investment is 18.55%,which has greater room for growth.It has been explored that the amount of equity investment needs to increase,and more importantly,how to choose the industry for equity investment.This paper selects industries with high return on equity and in line with national strategic industrial policies to explore the optimal investment portfolio of different industries under the conditions of minimum risk and certain rate of return on equity investment.The study finds that equity investment in insurance funds should be similarly invested in industries such as electric manufacturing and transportation,which have a relatively high risk compensation.And the expected return rate of the optimal investment industry portfolio and the weights of various industry allocations are calculated.It is hoped that the equity investment in insurance funds can provide a certain reference for the selected industry.