(Yicai) Dec. 29 -- The National Social Security Fund, a Chinese supplementary fund used for social security purposes, will expand its investment scope to seek better investment returns and support the real economy, according to a report by Xinhua Finance.

The NSSF is actively preparing to participate in listed companies' private placements as a strategic investor, which will further expand the fund's investment scope while injecting long-term investment funds into the capital market, said Wang Zhibin, director of the NSSF's equity asset division.

Wang made the comment after a regulatory draft by China's Ministry of Finance published early this month relaxed certain investment restrictions for the NSSF, allowing the fund to invest in qualified direct equity investment funds, industrial funds, and equity investment funds, such as start-up investment funds.

The investment scope expansion will provide more efficient channels for the NSSF to supply capital funds into the real economy, especially strategic emerging sectors, Wang noted.

Moreover, the draft will add important financial derivatives, such as stock index futures, government bond futures, and stock and bond options to the NSSF's investment targets, allowing the fund to make investments in the derivatives market for the purpose of hedging, which will, in turn, enrich the tools available to the fund to manage investment risks, said Zhao Jun, director of the NSSF's division of planning and research.

Stocks and equity assets can account for up to 40 percent and 30 percent, respectively, of the NSSF's assets portfolio, according to the draft.

This arrangement matches the NSSF's long-term investment nature and strong risk resilience capability, Zhao added. Equities assets have the best return on investment in the long run, so preferring equity assets is one of the key principles for long-term asset allocations, he noted.

The new arrangement should help the NSSF better realize its investment goal of keeping and increasing values in the long run, as well as let the fund play its role in driving the capital market's healthy development as a responsible investment body, Zhao pointed out.

Editor: Futura Costaglione