The Research Of The Impact Of Factors On Open-end Funds Performance In China

Since the launch of the first open-ended fund in China- Hua An Innovations—on Sept. 21, 2001, and experiencing the rapid growth in the early stage and stagnant growth in the bottleneck stage, open-ended funds in China have embraced a new round of expansion in 2014. Asset under management(AUM) of public funds has hit RMB 4.54 trillion, which reflects mutual funds industry as a core player in Chinese stock market. ‘Interim Provisions on Asset Management Institutions Conducting Mutual Fund Operations’ published by the CSRC in 2013 lowered the barriers of launching mutual funds, and added to the original provisions that other eligible asset management companies, including PE and VC, could also apply for opening fund management operations. With the lower barrier to applying public fund license, more and more competitors have been entering the market. Till the end of 2014, the number of mutual funds management company has reached 93. Among them, 14 companies’ AUM are over RMB 100 billion, while 37 companies’ AUM are under RMB 10 billion, mostly under RMB 5 billion. Besides the big difference in AUM of fund management companies, the difference in scale is also significant in the size of single open-ended fund. Meanwhile, institution-customized public funds pour out due to the fact that investment scale of main institutional investors including insurance companies, finance companies and security companies increase steadily. Under these circumstances, it is meaningful to analyze and research on factors affecting public funds performance and to determine the scale of effect of these factors. Based on other people’s research on internal factors affecting fund performance, this article conducts empirical research on factors affecting open-ended fund performance in China. The main objective of the study is equity funds in China. The six interpretation factors for fund performance are money supply(M2), market condition(CSI 300), listed corporation profitability(net profit year-on-year growth rate), fund management company competency(AUM), fund scale(average annual equity) and investor behavior(institutional investor proportion). As to research methods, this paper first performs linear regression analysis on sample funds, and then conducts significance tests on variable parameters through which we can reject or not reject the hypotheses. The artical also probes into the effect of factors according to the regression equations. Besides, cases are used to verify the result of regression analysis. From the empirical results, we can see that external factors have a major influence on fund performance, but the sustainability of this influence needs to be further discussed. Finally, in the light of the common phenomena of open-ended funds, the artical raises suggestions for enhancing open-ended fund industry based on the working experience of the author.