China's Securities Investment Fund Herd Behavior, Empirical Research

Standard finance is challenged by a lot of market anomalies for many years which make people realize that standard finance has many deficiencies. By virtue of the psychological research findings, Behavioral finance develops fast in recent years, which gets broad recognition. The study of herd behavior in the market is an important area of behavioral finance, which supplies great help for regulatory authorities to recognize the behavior of the market participants so as to make policies.The herd behavior of investors will disturb stock prices, which affects the stability of the stock market. As institutional investors, comparing with normal investors, the securities investment funds' herd behavior will impact stock market more. Although it is believed that normally funds is relatively rational, studies show that on China's security market, the herd behavior of securities investment funds is distinct. The reasons of funds' herd behavior are analyzed in this paper.In order to measure the herd behavior of securities investment funds, refering to Rao Yulei's herd behavior model based on trade investment portfolio, considering the detail condition of China security market, we build a herd behavior model based on stock investment portfolio (cohesive strength model) . Herd behavior empirical research of securities investment funds on China security market is done with this model, the result shows that the herd behavior of securities investment funds is distinct. A checking model is used to check the validity of the cohesive strength model, the empirical research result shows that using cohesive strength to indicate the herd behavior level is valid.