A Study Of The Influence Factors Of Purchase And Redemption Of Open-end Fund In China

Since September 2001 the first open-end fund in China-Hua an chuangxin’s establishment,open-end fund in our country is developing rapidly.Until December 31,2015 there were 2722 securities investment funds,the number of open-end fund is 2558,which is 94% of the total number of fund,net value of fund asset reached 8.397183 trillion yuan,the open-end fund’s net asset value reached 8.202411 trillion yuan,which is 97.7%of the total value,so open-ended funds become the absolute protagonist.The biggest characteristic of open-end fund is free “purchase and redemption mechanism”.Investors determine their purchase and redemption according to their own characteristics and assessment of the change of market environment of asset allocation.Due to the asymmetric information,this kind of mechanism design is,in fact,an implicit incentive to fund management companies and conducive to the formation of market mechanism of "evolution".Where as free “purchase and redemption mechanism”attracts investors as well as makes the fund share changing constantly.Fund share volatility makes fund companies operating funds harder.On the one hand,when fund faces big purchase,investment of fund management companies will work under high pressure in the short term,on the other hand,when the open-end fund faces huge redemption,there will be more serious influence,if fund management companies do not set aside ample liquidity,then the investment income will be reduced,especially the funds liquidity assets are insufficient to satisfy all requests,fund management companies would have to sell the fund assets.Massive stock sell-off makes stock prices fall and even reduces net value of fund,which would lead to more redemption.The more serious situation can cause fund liquidation.Open-end fund is one of the most important investment products in the stock market,whose large purchases or redemption cause severe fluctuations in the stock market.This will not only affect the fund investors and fund managers,but also is not conducive to the healthy and stable development of the securities market.So the study of behavior of purchase and redemption of open-end fund whether to the investors themselves,or the fund management companies,and securities market regulators are necessary and meaningful.This paper mainly studies the open-end fund’s purchase and redemption in our country combined with cognitive biases of the theory of behavioral finance、herd behavior and noise trading and prospect theory based on the analysis of development of open-endfunds in China and the present development situation of purchase and redemption.This paper studies the causes of open-end funds from the stock market,fund characteristics and fund managers and investors,etc.This paper uses the fixed effects model to analyze equity funds 、 bond funds and hybrid funds.For the purpose of the stabilization fund market、reducing variation in the fund,expanding income of investors and managers,this paper put forward the proposal from the fund investors and managers and securities regulators.The study found that:equity funds and hybrid funds exist ”redemption anomaly phenomenon”and are influenced by stock market movements,while bond funds not.This suggests that the fund investment have an impact on fund performance.The amount and the number of fund dividend can stimulate purchase,fund duration can inhibit the fund redemption,Scale advantage is not fully revealed in Chinese open-end fund market and so on.