Abstract: With the new farmers’ insurance coverage continues to expand, the accumulated amount of the new farmers’ insurance fund is becoming higher and higher; now it is a top priority to keep and increase the value of the new farmers’ insurance fund. The existing investment policy of bank deposits and buying government bonds will bring risks of depreciation to the fund. At present, the conditions are ripe for China’s new agricultural insurance fund to enter the capital market; when full coverage of the new agricultural insurance system comes into being, we can consider to invest the fund into the capital markets. By applying the portfolio theory to the simulation analysis of the proportion of asset allocation of the new farmers’ insurance fund, it is found that the proportion of the fund to be invested in bank deposits should not be less than 20 percent, the proportion of investment in government bonds should not be less than 20 percent, the proportion to be invested in corporate bonds should be no more than 50 percent, and the proportion to be invested in stocks should be no more than 10 percent.

Key words: new type of rural social endowment insurance; asset allocation; portfolio