Asset allocation is the primary tactic in securities investment decisions and is the fundamental element in determining the safety and benefits of securities investment. Strategic asset allocation is the most powerful means of immunization to the systemic risk. With the increasing of financial assets of China’s population, the investment consciousness is ever-increasing.
In the current macroeconomic background, the ability to accurately judge the investment value of financial assets, to seize strategic investment opportunities and to select the appropriate asset is the key to determine the future investment returns. Since the launch of the first open-ended funds in September 2001, China has a rapid development of open-ended funds. Open-ended funds gradually replace closed-end funds and become the mainstream of the fund industry. As of August 2009, open-ended funds have reached as many as 527 and the types of open-ended funds tend to be more diversified.
According to the division of open-ended funds by Galaxy Securities Funds Research Center, there are already five categories open-ended funds can be selected for investors. Facing of the wide variety, profitability uneven open-ended funds, it is a very practical problem for investors to obtain high-yield by making good use of the characteristics of the fund, a relatively high-yielding, low risk and good liquidity.
There are already many studies on how to choose funds in the micro-level. But as for how to allocate assets between different types of funds, such as stock funds, bond funds, currency funds, in the macro-level, there are few articles. Based on this, We attempt to introduce the idea of asset allocation to the allocation between different types of funds to compensate for the shortcomings of existing studies. It will provide reference on funds investment for investors. It will also provide an operational method and performance standard to create a real sense of the FOF product and to the operation of the existing set of quasi-FOF.
The idea of this paper is to solve the problem of how to allocate between different kinds of funds based on the theory of asset allocation. Select three kinds of most representative funds, which are stock funds, bond funds and currency funds. By analyzing the characters of time series, simulate the forecast model and predicate the yield of the three types of funds in the first six months of 2009. Then allocate between the stock, bond and currency funds by the optimal portfolio model of risk assets under the condition that having risk-free asset and not allowing short selling. The result proves that it’s necessary and effective to configure between the different types of funds.