Research On Relationship Between Fund Manager Flowing And Fund Performance

Recently with the rapid development of China's fund industry, more and more companies come to join the feast, not only expanding their scales, but also enriching their fund products. Investors are eager to participate the fund activity. New funds are always sold out even on the first day of publishing. There are three basic investment tools in the stock market: stock, bond, and fund which plays more and more important role in capital market. As the end of February 2011, China had 61 raised-fund companies with 729 raised-fund products, and the total net assets could even reach 2.520308 trillion Yuan.Fund Managers, who have a complete control on the whole fund, have become the focus of the market and their investment behaviors are closely related to the fund performance. Although there are about thousands of fund managers, the growth rate of the new fund managers is difficult to match the pace of fund expansion, which caused that one fund manager controlling more than one fund, average employment rate keeping down and the turnover rate moving up. Especially in recent years, the flow of fund managers caused widespread concern in the stock market, for it could bring unexpected adjustments on fund's investment philosophy and style. Based on these consideration, this article will test and analyze the relationship between flow of different fund manager and fund performance, including stock and hybrid funds managers, bond funds managers, money market funds managers and index funds managers. At last this article will provide valuable recommendations for regulatory agencies, funds management companies, ordinary investors and other market participants to promote the healthy development of China's fund industry, so this research is highly applicable in value and practical significance.To make a universal conclusion, this article covers a complete cycle of A-share markets, containing 578 fund manager change stories in 61 fund companies between Mar.2003 and Nov.23,2010, and use qualitative and quantitative measure to evaluate the investment fund manager's ability. And the author measures the manager flow performance through two time windows:long term (270 days) and short term (91 days), and studies the relationship between manager flow and fund performance by non-parametric test Spearman rank correlation method.After the research, we found that: the stock and hybrid fund managers liquidity have a great influence on fund performance, and the fund manager flow was significantly correlated with the flow before and after fund performance. Short-term bond fund performance is significantly related to the manager flow, but for long term this relationship is not obvious; the money market fund managers have the longest working time, but have a weak correlation with the fund performance; Index fund managers do not change very frequently, and also have a weak association with the Fund performance.Based on the result of the analysis, the article suggests that investors should rationally combine with revenue growth of the fund to charge the manager performance, and we should make a sound evaluation mechanism of the fund, focusing on long-term performance, which could prevent increasing the pressure of the fund managers and damaging the interests of investors; We should also enhance the operation flexibility, raise fund to make public offerings and reduce the fund Manager flow; At last, the regulators, fund companies and fund managers should help together to create a good professional atmosphere, protect the interests of investors, and promote the healthy development of China's fund industry.