China Relax the Restrictions on Offshore Investment

According to China Banking Regulatory Commission, the clients of commercial banks now can make offshore investment in equities and the related structured products, but not "commodities-based derivative products, hedge funds and debt securities with credit ratings below BBB as assigned by an international credit rating agency."

There are still some minor restrictions... such as "The total value of the investment in listed equities shall not exceed 50% of the total net asset value of each overseas wealth management product; the value of investment in an individual equity shall not exceed 5% of the total net asset value of each overseas wealth management product. The commercial banks shall regularly adjust the portfolio to ensure that the aforesaid limits are complied on an on-going basis."

Paradigm Shift

Unrealistic Return - No sense of return/risk, and try to earn 30% plus a year.

Benchmarking - Try to make better return than the broad market index.

Absolute Return - Try to earn absolute return rather than the fluctuated index return.

Target Return - Set a floating target return and adjust the target according to the economic conditions.

Target Cash Flow - Focus on the positive monthly cash flow rather than on the annual return.

Inverse/Leveraged Funds

Go to the following sites...
ProFunds
ProShares
RydexInvestments

You can see how they setup the funds in their annual reports.

Inverse Funds:
- Fixed Income: Repo + Bonds
- Inverse: Futures(Short) + Swap(Short Equity Index)
- Hedge: Options(Buy Call)

Leveraged Funds:
- Fixed Income: Repo + Bonds
- Leverage: Equity(Long) + Futures(Long) + Swap(Long Equity Index)
- Hedge: Options(Buy Put)