On the Dilemma of Chinese Open Investment Fund

This paper holds the view that the contracts of Chinese open fund are incomplete, which has caused a series of problems such as the adverse selection, the moral risk and investors' unprotected rights. Thus, investors have redeemed a lot of their fund share and Chinese open funds are in trouble. On the basis of these analysis, the paper puts forward three proposals to help Chinese open funds get out of the trouble. The first is to control and restrict the managers'and trustees' behavior and reduce the gap of fund contracts. The second is to construct the third sides of compulsive performing system of the fund contracts, the last is to build the reputation mechanism to promote the self-performing of fund contracts.