An Empirical Study On The Performance Of China's Open-end Securities Investment Funds

October 8, 2000, the"Open Securities Investment Fund pilot approach"was released, which was promulgated by China Securities Regulatory Commission. It has brought a turning point and provided legal protection for the development of open-end fund in China. September 2001, China's first open-end securities investment funds– Hua An Innovation was set up .Thanks to the favorable policy environment and the joint efforts, China's Fund Industry has entered a new development stage led by the open-ended fund. Our open-end securities investment funds have become a pivotal part in stock market. According to the latest statistics of December 2009, 60 fund management companies have set up in China, and the number of its funds has reached 625, including 590 open-end funds, closed-end funds 35. Open-end fund performance evaluation in a Scientific, rational, objective way is very important for the fund investors, fund management companies and the market regulators .While, the fund's performance evaluation also plays a significant role in the promotion of competition and in survival of the fittest.First, the article focuses on open-end securities investment funds, the basic concepts and features, and analyzes the development of securities investment funds status. Then In this paper, based on the analysis of related research from home and abroad, the author inspected the performance of open-ended fund in China by investigating the performance of 16 oldest open-end funds on Jan.1, 2003 to Dec.31, 2009, mainly using econometric analysis, from many aspects such as the traditional benefits and risk indicators, risk-adjusted measure of income, timing stock selection ability of fund managers and the continuity of fund performance.The process of empirical analysis and empirical conclusions of Open-end funds in China reveal the status of open-end funds and its existing shortcomings, respectively, by comparison to the market benchmark portfolio, studying the risk of open-end fund in China, China's open-end fund manager's ability, the open fund performance persistence and the open-end fund performance ranking of the investigation of different indicators. Empirical results show that our open-end securities investment fund performance is not better than the market benchmark portfolio. Overall, the Fund benefits less than the average market portfolio returns, but has less volatile. Risk-adjusted returns on the fund measure of the empirical results show that in the stock market, China's open-end funds excess returns can achieve some excess returns under the adjustment in the total risk, and under the systemic risk of adjustment the fund does have the ability to obtain excess returns. The empirical results of timing on the stock selection ability of fund managers show that the ability of fund managers has big difference. Some funds perform well and achieve remarkable success, while some funds have poor performance. That China's open-end funds do not have a significant long-continuity causes that the investors can not seize investment strategy, which brings disadvantage to choose fund.And on this basis, the following proposals are beneficial to the development of China's open-end fund as well as the development of China's Fund Industry. Firstly, it is an important step to Improve fund performance evaluation system and performance evaluation training fund industry, and to support localization of the fund rating agencies. While putting evaluation of fund management company into the fund performance evaluation system is also very necessary. Secondly, strengthen the incentive of fund management fees. Link the fund management fee of extraction to the operating performance of fund managers, implement incentive fee system based on a fixed rate, and combine the fund management fees with fund performance effectively, so that the Fund's performance is getting better. Thirdly, widen the investment channels for securities investment funds. To promote the healthy and rapid development of the fund industry, our country needs to accelerate the innovation of financial products and develop a variety of hedge fund investment tools and channels, thereby reducing the volatility of the stock market. Moreover, it is better to improve open-end funds management mechanism so as to achieve the best return on investment funds. Fourthly, optimize the external environment of the Securities Investment Fund, improve the fund management laws and regulations, solve the apparent intense conflicts of interest between fund investors and fund managers to protect the interests of investors,and improve corporate quality can reduce the volatility of the stock effectively, making the Fund investment more stable and profitable, therefore reduce the risk of securities investment funds, and increase the Fund's performance. Fifth, improve the sustainability and professional competence of fund managers, the phenomenon of fund managers often transferred from one fund to another makes investors require the fund managers have a specific and persistent.