On China's Individual Investors' Investment Behaviour Of Pursuing Star Funds

With the vigorous development of China's capital market, China's securities investment fund industry has also developed rapidly while the fund assets have continually expanded, with increasingly abundant varieties. In order to better help the investors to screen and select the outstanding funds for investment, many rating agencies of domestic fund market have launched a fund evaluation system, and then ranked the fund on the basis of NAV growth. Therefore, funds whose ratings or the net growth are among the top ones are touted as the star funds by the market while the fund management companies equipped with the fund stars are also regarded as star families.On the basis of the effects of star, the star funds are adored by many individual investors. As a result, there is a common phenomenon in our stock market:a large number of individual investors follow the star funds by investing the heavy storehouse burst. In the analysis framework of finance, such phenomenon is a typical herd behavior. The paper focuses on the study of herd behavior of individual investors which means that individual investors imitate and follow other people's behavior under the circumstances of insufficient and asymmetric information.In consequence, the paper started from the economic phenomenon that many individual investors were keen to follow up heavy storehouse burst of star funds in China's stock market. On the basis of the herd behavior, it discussed the behavior that individual investors'investment of pursuing star funds based on the theory of herd behavior.The paper is composed of five chapters, with structure and contents as follows:ChapterⅠ, preface:it mainly introduced the research background, objectives, significance, ideas and methods, etc.ChapterⅡ, the interpretation of herd behaviour theory:it mainly analysed the definition, generation mechanism, domestic and foreign research results and effects on market, and offered a theoretical support for the subsequent empirical analysis.ChapterⅢ, positive analysis on investment income between individual investors and star funds:the paper had the following three ways for pursing star funds:1. Analysis based on following the star funds' income chosen by Chinese market quarterly; 2. Analysis based on quarterly income of star funds; 3. Analysis based on following the yearly income of star funds chosen by Chinese market. The first two follow-ups method lasted for about three months while that of the third following-up method was about 11 months. Through the comparative analysis of three various follow-ups methods, the paper analyzed the feasibility and effectiveness of individual investors' simple following-up for star funds. And also, it comparatively analyzed which following-up method brought the optimal earnings and, on the basis of those obtained in various following-up methods, discussed the possible cause for the result.ChapterⅣ, the negative impact of herd behavior following star fundsChapterⅤ, conclusions and some related inspirations.