comparative analysis of the situation of Chinese and American securities investment fund holders

[ Abstract] By comparing and analyzing the main characteristics and development laws of Chinese and American fund holders, it is found that the structure of fund holders in China is not reasonable and perfect. Low income, high investment, high cost, low wealth, immature investment concept, few institutional investors and low risk tolerance are the remarkable characteristics of fund holders in China at present. Since the fluctuation of funds, especially the liquidity risk, is related to the security and stability of the financial market and even the whole financial system, this paper puts forward some suggestions and countermeasures on how to optimize and improve the structure of fund holders and guide investors' behavior.

[Keywords] Comparative Countermeasures on the Characteristics of Holders of Securities Investment Funds

1. Background and Purpose of Topic Selection

As a financial investment tool, securities investment funds have been widely concerned and developed rapidly in countries and regions at home and abroad since it came out. Since the foundation of Massachusetts Investment Trust Fund in 1924, the United States has developed for more than 8 years. In 1996, mutual funds in the United States surpassed the assets of commercial banks and became the largest financial industry in the United States. China's standardized securities investment funds originated in 1998, and the development history of standardized funds is only 1 years. In a very short time, the fund industry and fund market have achieved leap-forward development. The outstanding performance is that the number of funds and the scale of assets in China are growing at a high speed. According to the report of Galaxy Securities Fund Research Center, China's securities investment fund industry has become the fastest growing financial sub-industry in the financial market in recent two years. From 23 to 26, the average growth rate of bank savings deposits in China was 15%, the average growth rate of insurance assets was 32%, and the average growth rate of securities investment funds was as high as 65%. At the end of August, 27, China's securities investment fund industry has surpassed the insurance industry and become the second largest financial industry in China.

Open-end funds always have to face the uncertain redemption demands of investors. If investors lack maturity and rationality, and concentrate on redemption under the "herd effect", it will trigger the liquidity risk of funds, which in turn will lead to the fund selling heavy stocks in succession, which will aggravate the shrinkage of fund net value and the decline of stock price, and aggravate the panic atmosphere and redemption tide in the market. Therefore, optimizing the structure of fund holders and guiding investors' behavior are not only related to the income level and stability of the fund, but also related to the safety and stability of the financial market and even the financial system.

II. Comparison of the characteristics of holders

1. The high proportion of individual investors and lack of investment experience in China easily lead to liquidity risk

From 25 to 27, the proportion of individuals in the structure of fund holders in China increased significantly. Statistics show that in 25, the proportion of individual investors was only 59%, but in 27, this proportion has soared to 86%. Among the partial stock funds, this ratio is as high as 9%. Because most fund investors in China are individuals, their ability to resist risks is low, their investment experience is lacking, and the cost of intervention is high. Once the market is greatly adjusted, the net value of the fund is greatly reduced or stagflation for a long time, it is easy to make irrational decisions. Herd behavior usually encourages chasing up and down, which will lead to short-term fund investment.

2. The proportion of endowment insurance and social security fund among institutional investors in China is low

Among institutional investors in the securities market in the United States, the assets of institutional investors such as life insurance and endowment insurance are very large, and these investors have a long investment cycle and strong ability to bear short-term risks. About 4% of the United States * * * mutual funds are held by retirement funds, of which about 5% are employer-initiated retirement plans and 41k retirement plans. The 41K plan is a special pension system in the United States. Enterprises set up a special 41K account for employees, and employees choose their own portfolio to invest, and the income is included in their personal accounts. The amount of pension employees can get when they retire depends on the asset appreciation in the capital market invested by this account. However, the scale of institutional investors in China's funds such as pension insurance and social security funds is far lower than that in mature markets such as the United States. In 26, the proportion of social security funds and enterprise annuities was less than 2%. The institutional investors were mainly insurance companies and other general institutions, and the scale of institutional investors' involvement in the capital market, especially holding funds, was very limited.

3. Short holding period, high annual redemption rate and short-term investment behavior

The holding period of fund holders in China shows obvious "short-term characteristics": in 24, the redemption rate of partial stock funds in China reached 63%, which is equivalent to an average holding period of 1.6 years. In 26, the redemption rate of partial stock funds reached 85%, which is equivalent to the average holding period of funds less than 1.2 years. The holding period of American funds has also been significantly shortened, and the holders have gradually "moved from long-term investment to medium-term investment": the annual redemption rate of American equity funds in the 195s and 196s was only about 6%, equivalent to a fund holding period of 16 years.

4. The fund product line structure is not rich enough

In 26, equity and balanced fund assets in the United States accounted for 63%, bond fund assets accounted for 14% and money market funds accounted for 23%. The composition of American stock funds is rich, including industry funds, international funds or overseas funds, blue-chip funds and high-risk funds. However, China's stock funds and allocation funds account for 95% of the total fund market and are in an absolute dominant position. Most of the funds purchased by investors are stock funds, and the fund market structure is seriously unbalanced, which needs further optimization.

5. Fund investment accounts for an increase in the proportion of all household assets

In 198, only one-sixteenth households in the United States invested in the same fund, but after the 199s, more than one-third of them invested in the same fund. Similarly, the proportion of fund investment in all household assets in China is also increasing. According to the survey of China Securities Industry Association in the fourth quarter of 27, most of the current individual investors in funds are "wage earners" with a fixed monthly income of less than 5, yuan, accounting for 76%, which shows that this is a low-and middle-income group. Mainly including professional and technical personnel, enterprise and company managers, government organizations and institutions cadres and other working-class personnel.

6. Lack of clear standard preference for selecting funds

In the United States, an average annual rate of return of 2% in a bull market will make about 6% of fund expenses ignored, while in a bear market, low rate of return plus high fund rate will reduce the actual rate of return on investment, and investors will pay special attention to the rate cost. When many investors choose a fund, they usually compare the fees of the fund. At present, the assets managed by the top five fund management companies in China account for more than 34% of the total industry scale, and the top ten companies account for more than 5%. The industry concentration is close to the level of developed markets, and the concentration trend of funds is obvious. This shows that fierce competition in the same industry forces fund management companies to constantly innovate in business, varieties and services, and the company's brand, popularity, past performance and market image will become the key reference standards for investors to choose funds.

7. The overall income of funds underperformed the broader market, and investors' psychological expectations decreased

In 24, only one-seventh of funds in the United States outperformed the broader market index, while in 194, three-quarters of funds outperformed the broader market. From 1983 to 24, the average return of mutual funds in the United States was only 79% of the market return, which lagged behind the average increase and return of stocks. According to the classification of Morningstar Information, the arithmetic average annual return rate of 138 stock funds in China in 26 was as high as 128.16%, while the Shanghai and Shenzhen 3 Index rose by 161.55% in the same period. Most funds did not outperform the Shanghai and Shenzhen 3 Index, and only nine products, such as Huaxia Market Selection and China Post Core Optimization, really gained excess returns for investors, which was less than 1% of the total number of stock funds.

3. Countermeasures and suggestions for optimizing the structure of fund holders in China

1. Vigorously develop institutional investors such as pension insurance and enterprise annuity, and open up long-term sources of funds

Vigorously develop various institutional investors with stable funds, risk-return tendencies and different investment cycles will help improve the fund governance structure and reduce the probability of centralized redemption of funds. Institutional investors such as pension insurance and enterprise annuity have low risk, long cycle and stable cash flow. Increasing the proportion of their investment funds will help the stable development of funds.

since 199s, the American pension market has developed rapidly. At the end of 199, the total pension assets in the United States were $31,978 trillion, and at the end of 22, the total reached $1,115 trillion, 2,155 times that of 199. Pension, mutual fund and insurance fund have become the three main institutional investors in the American capital market.

China has a population of 1.3 billion, and there were two population growth peaks in China in 196s and 198s. These two groups of people have a strong demand for professional financial management. According to the calculation of the World Bank, by 23, the assets of pension funds in China will reach 1.8 trillion US dollars, making it the third largest enterprise annuity market in the world, with great potential in the future. Establishing a personal pension account investment plan similar to the American 41k can improve China's pension system and guide investors to make long-term investments in funds, regardless of short-term market fluctuations.

2. Guiding institutional investors to moderately increase their investment proportion through preferential tax policies

The tax protection mechanism is an important part of the protection mechanism for investors' interests in the capital market. In American tax law, according to the length of holding securities, it is divided into long-term capital gains and short-term capital gains. The longer the holding period, the lower the tax rate when selling. In this case, fund holders will pay attention to the benefits of after-tax returns, and the operating style of funds will be longer. In China's current laws and regulations, the investment income of individuals investing in stocks and funds is tax-free, the investment income of institutions investing in stocks and funds is taxable, and the dividends of institutions' stocks are taxable.

3. Adjust the fund fee structure to encourage investors to invest for a long time

By adjusting the fund subscription and redemption rate structure, investors will be guided to hold the fund for a long time and the risk of centralized redemption of the fund will be reduced. If the redemption rate design under the time regressive system is adopted, the fund holders will be charged separately according to the length of holding time, and the longer the holding time, the lower the rate. Furthermore, we can flexibly adjust the various rates of the fund and grade the fund. You can also design classified rates according to the types of investors. Institutional investors can be subdivided into insurance funds, social security funds and listed companies, and different charging standards are designed to meet the needs of different types of institutional investors.

4. Promote investment methods such as regular quota

At present, 63% of the holders of * * * mutual funds in the United States hold * * * mutual funds through defined payment plan accounts. Investors who adopt fixed-term investment will not redeem their fund shares when the market faces short-term adjustment, but will buy more fund shares at a lower price with the same funds. The popularization of fixed-term investment will improve the stable inflow of funds for open-end funds in China, thus greatly reducing the risk of centralized redemption of funds.

5. Design differentiated products and establish a mature investment concept

It is very necessary to provide different new fund varieties for investors with different risk-return preferences according to their different preferences. Considering the steady demand in the downturn, we can appropriately increase the proportion of bond funds and money market funds, vigorously develop hedge funds such as principal guaranteed fund to cope with the stock market adjustment, and form a perfect fund product line. You can also consider innovative ways such as fund splitting, secondary issuance, and the introduction of fund wealth management accounts.

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