Subject category:
Finance, Accounting and Control
Published by:
China Europe International Business School
Length: 26 pages
Data source: Field research
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Abstract
Jingying Fund was a newly established open-ended fund in China, specialised in investments in stocks and bonds. Due to a wrong judgement of the stock market fluctuation, Jinying Fund performed very badly in October 2002. China''s stock market was premature and had a significant systematic risk. In addition, most funds took similar investment strategy. Moreover, there were no financial derivatives and sell-short mechanisms for China''s funds. As a result, it was crucial to decide the reasonable ratio among stocks, bonds and cashes. Pushed by institutional shareholders, the company ordered the management team of Jingying Fund to make sound asset allocations to improve its performance. Thus, the team had to analyse the macro economy, stock market, bond market and international market to act in the right direction. The case is useful in discussing asset allocation.
About
Abstract
Jingying Fund was a newly established open-ended fund in China, specialised in investments in stocks and bonds. Due to a wrong judgement of the stock market fluctuation, Jinying Fund performed very badly in October 2002. China''s stock market was premature and had a significant systematic risk. In addition, most funds took similar investment strategy. Moreover, there were no financial derivatives and sell-short mechanisms for China''s funds. As a result, it was crucial to decide the reasonable ratio among stocks, bonds and cashes. Pushed by institutional shareholders, the company ordered the management team of Jingying Fund to make sound asset allocations to improve its performance. Thus, the team had to analyse the macro economy, stock market, bond market and international market to act in the right direction. The case is useful in discussing asset allocation.